Development of the vertebrate eye has been found to require the activity of several genes encoding homeodomain proteins (Freund, C., Horsford, D. J. & McInnes, R. R. (1996) Hum. Mol. Genet. 5, 1471-1488). Some of these genes, or portions thereof, are highly conserved across phyla. In this paper, we report the identification of a novel homeobox gene, rax (retina and anterior neural fold homeobox), whose expression pattern suggests an important role in eye development. The predicted amino acid sequence of Rax comprises a protein with a paired-type homeobox, as well as the octapeptide that is found in many paired-type homeobox genes. In addition, in the C terminus of Rax, we found a 15-aa domain that we have named the OAR domain. This domain is also found in several other homeobox genes. In the early mouse embryo, rax is expressed in the anterior neural fold, including areas that will give rise to the ventral forebrain and optic vesicles. Once the optic vesicles form, rax expression is restricted to the ventral diencephalon and the optic vesicles. At later stages, rax expression is found only in the developing retina. After birth, the expression of rax is restricted to the zone of proliferating cells within the retina, and expression gradually decreases as proliferation declines. These findings suggest that rax is one of the molecules that define the eye field during early development and that it has a role in the proliferation and͞or differentiation of retinal cells.During vertebrate development, the central nervous system emerges as a highly complex, patterned structure with an enormous diversity of neuronal and glial cell types. The vertebrate retina is a relatively well described and accessible structure that provides an excellent model system for studies of patterning and cell fate determination within the central nervous system (1). In the early stages of eye development, the optic vesicles evaginate from the ventral forebrain, making contact with the overlying surface ectoderm at embryonic day 9 (E9) in the mouse. Subsequently, the optic vesicle invaginates to form the optic cup, while overlying surface ectoderm gives rise to the lens placode (2, 3). Retinal neurogenesis then proceeds within the inner layer of the optic cup. The mitotic progenitors within the optic cup line the surface apposed to the former lumen of the neural tube, in an area known as the ventricular zone (VZ). Postmitotic progeny of the retina migrate away from the VZ as they differentiate to form the laminar structure of the mature retina. While the different retinal cells are born in a sequence conserved among many species, more than one cell type is born at any one time (4). Lineage analyses in several species have shown that retinal progenitors remain multipotent throughout development (5-8).