We previously reported that sonic hedgehog (Shh) induces the differentiation of rat ventral forebrain neurons expressing a novel marker, EVF-1 [Development 125 (1998) 5079]. In this report, we show that EVF-1 is a novel, developmentally regulated, non-coding RNA, with no homology to other known non-coding RNA sequences. Sequence analysis, in vitro translation, and comparison of the rat and mouse EVF-1 sequences suggest that EVF-1 contains no protein coding regions. Chromosomal location indicates that EVF-1 maps adjacent to the Dlx6 gene on mouse chromosome 6. RNA in situ hybridization of the embryonic rat forebrain shows that EVF-1 is expressed by immature neurons in the subventricular zone and its expression decreases during forebrain development. Whole mount in situ hybridization shows that EVF-1 is expressed at high levels in the branchial arches, ventral forebrain, olfactory bulb, and limbs. EVF-1 expression is linked to Shh and the Dlx family of proteins, genes with a demonstrated importance to ventral forebrain and craniofacial development.