Otx2 is a paired type homeobox gene that plays essential roles in each step and site of head development in vertebrates. In the mouse, Otx2 expression in the anterior neuroectoderm is regulated primarily by two distinct enhancers: anterior neuroectoderm (AN) and forebrain/midbrain (FM) enhancers at 92 kb and 75 kb 5 of the Otx2 locus, respectively. The AN enhancer has activity in the entire anterior neuroectoderm at headfold and early somite stages, whereas the FM enhancer is subsequently active in the future caudal forebrain and midbrain ectoderm. In tetrapods, both AN and FM enhancers are conserved, whereas the AN region is missing in teleosts, despite overt Otx2 expression in the anterior neuroectoderm. Here, we show that zebrafish and fugu FM regions drive expression not only in the forebrain and midbrain but also in the anterior neuroectoderm at headfold stage. The analysis of coelacanth and skate genomic Otx2 orthologues suggests that the utilization of the two enhancers, AN and FM, is an ancestral condition. In contrast, the AN enhancer has been specifically lost in the teleost lineage with a compensatory establishment of AN activity within the FM enhancer. Furthermore, the AN activity in the fish FM enhancer was established by recruiting upstream factors different from those that direct the tetrapod AN enhancer, yet zebrafish FM enhancer is active in both mouse and zebrafish anterior neuroectoderm at the headfold stage.anterior neuroectoderm ͉ coelacanth ͉ enhancer ͉ tetrapod ͉ chondrichthyes T he vertebrate head is an evolutionary novelty called ''new head'' by Gans and Northcutt (1) that is characterized by structures that derive from the anterior neuroectoderm cells, cephalic neural crest cells, and placode cells. It is also a structure that has most dramatically changed during vertebrate evolution. Diversity in the animal body plan might have been brought about by changes in expression of a relatively limited number of key developmental regulators such as Hox genes in the trunk (2, 3). The Otx family of genes plays essential roles in head development (4-9). Otx genes encode a paired-type of homeoprotein homologous to a Drosophila head gap gene, otd. Gnathostomes possess three paralogues, Otx1, Otx2, and Otx5, whereas teleosts that underwent genome duplication could possess extra copies. In mouse, Otx2 plays major roles in each site of head development (5-11): epiblast, anterior visceral endoderm, anterior mesendoderm, anterior neuroectoderm, forebrain/midbrain, and cephalic neural crest cells. Fugu has two Otx2, but zebrafish has only one (9).To elucidate the molecular mechanisms regulating Otx2 expression during mouse brain development, we have identified three enhancers: anterior neuroectoderm enhancer (AN), forebrain/midbrain enhancer (FM), and forebrain/midbrain enhancer 2 (FM2) at 90 kb and 75 kb upstream and 115 kb downstream of the Otx2 translational start site, respectively (8, 9). The AN enhancer is not active in the epiblast but becomes active at embryonic day (E) 7.0 in the entire anterior...