The mouse Hox-7.1 gene has previously been shown to be related to the Drosophila Msh homeobox-containing gene. Here we report the isolation of a new member of this family which resides at an unlinked chromosomal location and has been designated Hox-8.1. Both Hox-7.1 and Hox-8.1 are expressed in the mouse embryo during the early stages of eye development in a distinct spatial and temporal relationship. Hox-8.1 is expressed in the surface ectoderm and in the optic vesicle before invagination occurs in regions corresponding to the prospective corneal epithelium and neural retina, respectively. Hox-7.1 is expressed after formation of the optic cup, marking the domain that will give rise to the ciliary body. The activity of these genes indicates that the inner layer of the optic cup is differentiated into three distinct compartments before overt cellular differentiation occurs. Our results suggest that these genes are involved in defining the region that gives rise to the inner layer of the optic cup and in patterning this tissue to define the iris, ciliary body and retina.