We have isolated zebrafish nk2.2, a member of the Nk-2 family of homeobox genes. nk2.2 is expressed in a continuous narrow band of cells along a boundary zone demarcating the location at which two of the earliest nuclei in the brain differentiate. This band of cells is located within a few cell diameters of cells expressing the signalling molecule sonic hedgehog/vertebrate hedgehog-1 (shh/vhh-1). Injection of shh/vhh-1 RNA results in ectopic expression of nk2.2 and concomitant abnormalities in the forebrain and eyes. Moreover, cyclops mutant embryos, which initially lack neurectodermal expression of shh/vhh-1, show a concomitant lack of nk2.2 expression. Together, these results suggest a requirement of shh/vhh-1 protein for the spatial regulation of nk2.2 expression.