Mutations in the C. elegans gene egl-38 result in a discrete set of defects in developmental pattern formation. In the developing egg-laying system of egl-38 mutant hermaphrodites, the identity of four uterine cells is disrupted and they adopt the fate of their neighbor cells. Likewise, the identity of two rectal epithelial cells in the male tail is disrupted and one of these cells adopts the fate of its neighbor cell. Genetic analysis suggests that the egl-38 functions in the tail and the egg-laying system are partially separable, as different egl-38 mutations can preferentially disrupt the different functions. We have cloned egl-38 and shown that it is a member of the PAX family of genes, which encode transcription factors implicated in a variety of developmental patterning events. The predicted EGL-38 protein is most similar to the mammalian class of proteins that includes PAX2, PAX5 and PAX8. The sequence of egl-38 mutant DNA indicates that the tissue-preferential defects of egl-38 mutations result from substitutions in the DNA-binding paired domain of the EGL-38 protein. egl-38 thus provides the first molecular genetic insight into two specific patterning events that occur during C. elegans development and also provides the opportunity to investigate the in vivo functions of this class of PAX proteins with single cell resolution.