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Cloning and sequencing of mouse Mf2 (mesoderm/mesenchyme forkhead 2) cDNAs revealed an open reading frame encoding a putative protein of 492 amino acids which, after in vitro translation, binds to a DNA consensus sequence. Mf2 is expressed at high levels in the ventral region of newly formed somites, in sclerotomal derivatives, in lateral plate and cephalic mesoderm and in the first and second branchial arches. Other regions of mesodermal expression include the developing tongue, meninges, nose, whiskers, kidney, genital tubercule and limb joints. In the nervous system Mf2 is transcribed in restricted regions of the mid- and forebrain. In several tissues, including the early somite, Mf2 is expressed in cell populations adjacent to regions expressing sonic hedgehog (Shh) and in explant cultures of presomitic mesoderm Mf2 is induced by Shh secreted by COS cells. These results suggest that Mf2, like other murine forkhead genes, has multiple roles in embryogenesis, possibly mediating the response of cells to signaling molecules such as SHH.