The patterning of the mammalian brain is orchestrated by a large battery of regulatory genes. Here we examine the developmental function of the Gsh-2 nonclustered homeobox gene. Whole-mount and serial section in situ hybridizations have been used to better define Gsh-2 expression domains within the developing forebrain, midbrain, and hindbrain. Gsh-2 transcripts are shown to be particularly abundant in the hindbrain and within the developing ganglionic eminences of the forebrain. In addition, mice carrying a targeted mutation of Gsh-2 have been generated and characterized. Homozygous mutants uniformly failed to survive more than 1 day following birth. At the physiologic level the mutants experienced apnea and reduced levels of hemoglobin oxygenation. Histologically, the mutant brains had striking alterations of discrete components. In the forebrain the lateral ganglionic eminence was reduced in size. In the hindbrain, the area postrema, an important cardiorespiratory chemosensory center, was absent. The contiguous nucleus tractus solitarius, involved in integrating sensory input to maintain homeostasis, was also severely malformed in mutants. Immunohistochemistry was used to examine the mutant brains for alterations in the distribution of markers specific for serotonergic and cholinergic neurons. In addition, in situ hybridizations were used to define expression patterns of the Dlx 2 and Nkx 2.1 homeobox genes in Gsh-2 mutant mice. The mutant lateral ganglionic eminences showed an abnormal absence of Dlx 2 expression. These results better define the genetic program of development of the mammalian brain, support neuromeric models of brain development, and further suggest similar patterning function for homeobox genes in phylogenetically diverse organisms.