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 and/or differentiation of retinal cells.