The protein encoded by the zebrafish gene svp[40] belongs to a distinct group within the steroid hormone receptor superfamily that includes Drosophila seven-up and several vertebrate orphan receptors. Svp[40] shares a particularly high degree of amino acid sequence identity (approximately 86%) with the mammalian transcription factors ARP-1 and COUP. The gene is expressed in specific regional and segmental domains within the developing brain. Correspondence between this expression pattern and early sites of neuronal differentiation and axonogenesis in the rostral brain may reflect an involvement in neural patterning. During the early embryonic stages when hindbrain rhombomeres are formed, a segmental expression pattern is established as a step gradient. The single steps of this gradient coincide directly with the four anteriormost segments suggesting a role in controlling rhombomere-specific expression of genes contributing to cell differentiation in the hindbrain. Since COUP/ARP-1 and retinoic acid receptors (RARs/RXRs) are known to have similar DNA-binding specificities, different levels of Svp[40] might modulate retinoid signaling through competition for binding to specific RAREs in the promoters of target genes. Treatment of zebrafish embryos with retinoic acid affects the svp[40] step gradient and causes an elimination of a regional expression domain in the retina. These observations are consistent with svp[40] being an integral part of the retinoid signaling network during hindbrain and eye development.