The "winged helix" or "forkhead" transcription factors comprise a large gene family whose members are defined by a common 100-amino acid DNA binding domain. Here we describe the structure and expression of the mouse fkh-2 gene, which encodes a protein of 48 kDa with high similarity to other winged helix transcription factors within the DNA binding region, but unique potential transactivation domains. The gene is encoded by a single exon and is expressed in headfold stage embryos in the notochord, the anterior neuroectoderm, and a few cells of the definite endoderm. This expression becomes restricted to the anteriormost portions of the invaginating foregut and the developing midbrain. From day 11.5 of gestation onward, fkh-2 transcripts are restricted to the midbrain and become progressively localized to the red nuclei as the sole site of expression. The fkh-2 gene maps to chromosome 19B and is a candidate gene for the mouse mutation mdf (muscle-deficient) which is characterized by nervous tremors and degeneration of the hindlimb muscles. Although the expression patterns of the fkh-2 gene and another winged helix protein, HNF-3 beta, are overlapping in early stages of gestation and although the promoter of the fkh-2 gene contains a HNF-3 binding site, we demonstrate that the activation of the fkh-2 gene is independent of HNF-3 beta.