Hox-like homeodomain proteins play a critical role during embryonic development by regulating the transcription of genes that are important for the generation of specific organs or cell types. The homeodomain transcription factor IDX1/IPF1, the expression of which was thought until recently to be restricted to the pancreas and foregut, is required for pancreas development and for the expression of genes controlling glucose homeostasis. We report that IDX1/IPF1 is also expressed in embryonic rat brain at a time coincident with active neurogenesis. Electrophoretic mobility shift assays with nuclear extracts of embryonic brains indicated that IDX1/IPF1 binds to two somatostatin promoter elements, SMS-UE-B and the recently discovered SMS-TAAT3. The requirement of these elements for IDX1/IPF1 transactivation of the somatostatin gene in neural cells was confirmed in transfection studies using embryonic cerebral cortex-derived RC2.E10 cells. Immunohistochemical staining of rat embryos showed IDX1/IPF1-positive cells located near the ventricular surface in germinative areas of the developing central nervous system. Cellular colocalization of IDX1/IPF1 and somatostatin was found in several areas of the developing brain, including cortex, ganglionic eminence, hypothalamus, and inferior colliculus. These results support the notion that IDX1/IPF1 regulates gene expression during development of the central nervous system independent of its role on pancreas development and function.