In situ analysis of the chicken cSox2 gene, a member of the transcription factor family containing an Sry-like high-mobility group (HMG) box, demonstrated localized expression in the embryonic endoderm. Transcripts of cSox2 appeared before commencement of morphogenesis and cytodifferentiation in the rostral gut epithelium from the pharynx to the stomach. The caudal limit of cSox2 expression coincided with that of the region competent for proventricular differentiation and to the rostral limit of the domain of CdxA, a homologue of Drosophila caudal. During morphogenesis, the level of transcripts of cSox2 decreased in epithelia invaginating into surrounding mesenchyme to form glandular or tubular structures, such as the primordia of the thyroid and lung, glandular epithelium of the proventriculus, and secondary bronchus of the lung. Tissue recombination experiments demonstrated that cSox2 expression is regulated by the underlying mesenchyme as well as morphogenesis and cytodifferentiation. The results suggest that cSox2 plays pivotal roles in generating morphologically and physiologically distinct types of epithelial cells in the gut.