The ParaHox genes consist of 3 homeobox gene families, Gsx, Xlox, and Cdx, all of which have fundamental roles in development. Xlox (known as IPF1 or PDX1 in vertebrates), for example, is crucial for development of the vertebrate pancreas and is also involved in regulation of insulin expression. The invertebrate amphioxus has a gene cluster containing one gene from each of the gene families, whereas in all vertebrates examined to date there are additional copies resultant from ParaHox gene cluster duplications at the base of the vertebrate lineage. Extant vertebrates basal to bony and cartilaginous fish are central to the question of when and how these multiple genes arose in the vertebrate genome. Here, we report the mapping of a ParaHox gene cluster in 2 species of hagfishes. Unexpectedly, these basal vertebrates have lost a functional Xlox gene from this cluster, unlike every other vertebrate examined to date. Furthermore, our phylogenetic analyses suggest that hagfishes may have diverged from the vertebrate lineage before the duplications, which created the multiple ParaHox clusters in jawed vertebrates.