We have examined the pattern of expression of the human PAX2 gene in Wilms' tumors and human fetal kidney by Northern blot and in situ hybridization. Human PAX2 encodes a paired box-containing protein and has a high degree of homology with mouse and Drosophila paired box genes. In situ hybridization analysis reveals that PAX2 is expressed in nephrogenic structures in fetal kidney and also in Wilms' tumors. This pattern of expression suggests that PAX2 may have a role in differentiation of tissues in the kidney. In fetal kidney, PAX2 expression rapidly attenuates following the initial differentiation, but no evidence of attenuation was found in Wilms' tumors. The timing of PAX2 expression is restricted to fetal development, although high levels of expression were also observed in nephrogenic rests of residual normal juvenile kidney tissue adjacent to a Wilms' tumor. Nephrogenic rests are the presumptive precursors of Wilms' tumor but are not necessarily neoplastic. The failure of PAX2 expression to attenuate in Wilms' tumors and nephrogenic rests may be associated with events leading to the onset of Wilms' tumor. By somatic cell hybrid mapping, the PAX2 gene was localized to chromosome 10q22.1-q24.3, although this region has not previously been implicated in Wilms' tumor.