We have cloned ovine Barx2, a member of the Bar class of homeobox genes, and present the first description of Barx2 expression in wool follicle development. Barx2 is uniformly expressed in the embryonic ectoderm but is transiently downregulated during the initiation of follicle morphogenesis. Subsequently, Barx2 is expressed throughout the epithelial component of the developing follicle except for a small group of cells at the leading edge of the follicle placode. These Barx2-negative cells are destined to form the follicle bulb and are the progenitors of the inner root sheath and hair shaft. In adult follicles, Barx2 is expressed throughout the outer root sheath but not in the inner root sheath or hair shaft, or in dermal cells associated with the follicle. The pattern of Barx2 expression in follicle morphogenesis is similar to that of the cell adhesion molecule E-cadherin, a similarity that echoes Barx2 coexpression with the L1 cell adhesion molecule in other tissues during mouse embryogenesis. Barx2 is also expressed in tongue and esophagus, two other keratinizing tissues, and we speculate that Barx2 may have a general function in controlling adhesive processes in keratinizing epithelia.