A novel murine dispersed homeobox gene, designated Gsh-2, is described. Analysis of cDNA sequence, including the full open reading frame, reveals an encoded homeodomain that is surprisingly similar to those of the Antennapedia-type clustered Hox genes. In addition, the encoded protein includes polyhistidine and polyalanine tracts, as observed for several other genes of developmental significance. In situ hybridizations showed Gsh-2 expression in the developing central nervous system, including the ganglionic eminences of the forebrain, the diencephalon, which gives rise to the thalamus and hypothalamus, and in the hindbrain. Furthermore, a random oligonucleotide selection and PCR amplification procedure was used to define a target DNA binding sequence, CNAATTAG, as a first step towards the identification of downstream target genes.