We have identified a new basic domain helix-loop-helix (bHLH) gene, NSCL-2, which was cloned because of its homology to the previously described putative hematopoietic transcription factor, SCL. NSCL-2 has been identified in both human and murine DNA. NSCL-2 complementary DNA clones were obtained from an 11.5-day murine embryo library. The coding region is 405 base pairs and encodes a predicted protein of 15.6 kilodaltons. There is 74% homology at the nucleotide level with the coding region of the murine SCL and 27% protein homology. Unlike the majority of previously described bHLH genes, the NSCL-2 coding region ends only six amino acids beyond the second amphipathic helix of the HLH domain. The NSCL-2 gene shows a markedly restricted pattern of expression predominantly confined to murine embryos at days 11-13 of development, although low level expression can be detected in murine embryos flanking this time point. Examination of 11- and 12-day mouse embryos by tissue in situ hybridization reveals expression of NSCL-2 in the developing nervous system, most likely in developing neurons. The NSCL-2 gene maps to murine chromosome 3. The temporally and tissue restricted pattern of expression of this gene and its identification as a member of a family of transcription factors relevant to growth and development in a wide variety of species suggest a role for NSCL-2 in the development of the eukaryotic nervous system.