We studied the expression of two vertebrate homeobox genes, Otx1 and Otx2, related to orthodenticle, a gene expressed in the developing head of Drosophila. Both genes are expressed in restricted regions of the developing rostral brain including the presumptive cerebral cortex and olfactory bulbs. The expression patterns of the two genes in diencephalon suggest that they both have a role in establishing the boundary between presumptive dorsal and ventral thalamus. They are also expressed in regions of the developing olfactory, auricolar and ocular system, including the covering of the optic nerve. Otx1 expression is detectable from day 8 of gestation in telencephalic, diencephalic and mesencephalic regions. From day 10.5 of gestation its expression extends to some metencephalic areas. Otx2 appears to be already expressed in the epiblast of prestreak embryos. It persists in the entire embryonic ectoderm for some time after the onset of gastrulation. In midstreak embryos its expression appears progressively restricted to the anterior embryonic ectoderm corresponding to presumptive fore- and mid-brain. In early midgestation embryos it is expressed in telencephalic, diencephalic and mesencephalic regions but from day 11.75 of gestation its expression disappears from dorsal telencephalon and is confined to diencephalic and mesencephalic regions. Otx2 is one of the earliest genes expressed in the epiblast and immediately afterwards is expressed in anterior neuroectoderm, demarcating rostral brain regions even before headfold formation. Its gene product contains a homeodomain of the bicoid class and is able to recognize and transactivate a bicoid target sequence.