The anteroposterior patterning of the embryonic gut represents one of the most intriguing biological processes in development. A dynamic control of gene transcription regulation and cell movement is perfectly orchestrated to shape a functional gut in distinct specialized parts. Two ParaHox genes, Xlox and Cdx, play key roles in vertebrate and sea urchin gut patterning through molecular mechanisms that are still mostly unclear. Here, we have combined functional analysis methodologies with high-resolution imaging and RNA-seq to investigate Xlox and Cdx regulation and function. We reveal part of the regulatory machinery responsible for the onset of Xlox and Cdx transcription, uncover a Wnt10 signal that mediates Xlox repression in the intestinal cells, and provide evidence of Xlox-and Cdx-mediated control of stomach and intestine differentiation, respectively. Our findings offer a novel mechanistic explanation of how the control of transcription is linked to cell differentiation and morphogenesis for the development of a perfectly organized biological system such as the sea urchin larval gut.