The Hex/Prh homeobox gene is expressed in a subset of adult blood cell types and may play a role in the differentiation of the myeloid and B-cell lineages. In a search for homeobox genes involved in cardiovascular development, we have independently isolated a Xenopus laevis cDNA which appears to be the amphibian orthologue of Hex/Prh. Based on high sequence similarity in a number of regions, particularly the critical homeobox, we have named this gene XHex. This developmentally regulated gene is first expressed in the dorsal endomesoderm of the gastrula stage embryo. This tissue goes on to contribute to the structures of the embryonic liver and XHex continues to be expressed in the liver throughout development. From the tailbud stage, XHex is expressed in vascular endothelial cells throughout the developing vascular network. Vascular expression of XHex is transient and commences slightly after expression of the receptor tyrosine kinase gene, flk-1, which is known to be essential for vascular development. This observation raises the possibility that XHex is one of the transcription factors that responds to the VEGF/Flk-1 signal transduction pathway leading to differentiation of vascular endothelial cells. XHex is unique amongst homeobox genes in displaying expression in the endothelial layer throughout the developing vasculature. Overexpression of XHex sequences in the frog embryo causes disruption to developing vascular structures and an increase in the number of vascular endothelial cells, suggesting a possible role in regulation of cell proliferation.