We describe an esterase activity that, by the criterion of histochemical staining, is completely localized to the intestine of the nematode Caenorhabditis elegans. Esterase activity appears in the embryonic gut when the embryo contains 4-8 intestinal precursor cells and 100-150 total cells. Esterase activity is abolished by treating early embryos with alpha-amanitin, indicating that expression depends upon transcription by RNA polymerase II within the developing embryo. In partial embryos produced by lysing one blastomere of a two-cell embryo, esterase expression appears only in descendants of the blastomere that normally produces the gut; esterase expression appears independent of the other non-gut blastomere. In early cleavage-stage embryos in which cytokinesis has been blocked by cytochalasin D, esterase expression appears at the normal time and only in cells in the gut lineage; thus neither normal cell division nor normal embryogenesis is required for lineage-specific expression. However, esterase does not appear in cytochalasin D blocked one-cell embryos. These observations confirm the traditional view that C. elegans development is "mosaic," with each cell following a defined independent program of gene expression.