The expression of the murine paired-box-containing gene, Pax2, is examined in the developing central nervous system by in situ hybridization. Pax2 expression is detected along the boundaries of primary divisions of the neural tube. Initially, Pax2 is expressed in the ventricular zone in two compartments of cells on either side of the sulcus limitans and along the entire rhombencephalon and spinal cord. At later times, Pax2 is restricted to progeny cells that have migrated to specific regions of the intermediate zone. In the eye, Pax2 expression is restricted to the ventral half of the optic cup and stalk and later to the optic disc and nerve. In the ear, expression is restricted to regions of the otic vesicle that form neuronal components. The transient and restricted nature of Pax2 expression suggests that this murine segmentation gene homologue may also establish compartmental boundaries and contribute to the specification of neuronal identity, as do certain Drosophila segmentation genes.