We have identified a new member of the spalt-like gene family in mice, msal-3. We compared the expression patterns of msal-3 and msal-1 during development and show that they exhibit overlapping yet exclusive patterns of expression in the developing forebrain, diencephalon, midbrain/hindbrain boundary and spinal cord. Both genes are expressed from E7 in opposite gradients in primitive streak mesoderm. Subsequently their transcripts are localized to regions of mesenchyme/epithelial interaction in the palate, heart, limbs, anal and urogenital region.