During development of the vertebrate nervous system, the neural cell adhesion molecule (N-CAM) is expressed in a defined spatiotemporal pattern. We have proposed that the expression of N-CAM is controlled, in part, by proteins encoded by homeobox genes. This hypothesis has been supported by previous in vitro experiments showing that products of homeobox genes can both bind to and transactivate the N-CAM promoter via two homeodomain binding sites, HBS-I and HBS-II. We have now tested the hypothesis that the N-CAM gene is a target of homeodomain proteins in vivo by using transgenic mice containing native and mutated N-CAM promoter constructs linked to a beta-galactosidase reporter gene. Segments of the 5' flanking region of the mouse N-CAM gene were sufficient to direct expression of the reporter gene in the central nervous system in a pattern consistent with that of the endogenous N-CAM gene. For example, at embryonic day (E) 11, beta-galactosidase staining was found in postmitotic neurons in dorsolateral and ventrolateral regions of the spinal cord; at E14.5, staining was seen in these neurons throughout the spinal cord. In contrast, mice carrying an N-CAM promoter-reporter construct with mutations in both homeodomain binding sites (HBS-I and HBS-II) showed altered expression patterns in the spinal cord. At E11, beta-galactosidase expression was seen in the ventrolateral spinal cord, but was absent in the dorsolateral areas, and at E 14.5, beta-galactosidase expression was no longer detected in any cells of the cord. Homeodomain binding sites found in the N-CAM promoter thus appear to be important in determining specific expression patterns of N-CAM along the dorsoventral axis in the developing spinal cord. These experiments suggest that the N-CAM gene is an in vivo target of homeobox gene products in vertebrates.