The neural cell adhesion molecule (N-CAM) mediates cell-cell interactions and is expressed in characteristic spatiotemporal patterns during development. In previous studies of factors that control N-CAM gene expression, we identified a binding site for the paired domain of Pax proteins (designated PBS) in the mouse N-CAM promoter. In this study, we demonstrate that a transcription factor known to be important for development of the central nervous system, Pax-6, binds to the N-CAM PBS and show that the PBS can influence N-CAM expression in vivo. Pax-6, produced in COS-1 cells, bound to the PBS through two half-sites, PBS-1 and PBS-2; mutations in both of these sites completely disrupted binding. Moreover, nuclear extracts from embryonic day (E) 11.5 mouse embryos bound to the PBS, and this binding was inhibited by antibodies to Pax-6. To determine the role of the PBS in vivo, we generated transgenic mice with N-CAM promoter/lacZ gene constructs containing either a wild-type or a mutated PBS. Mutations in PBS-1 and PBS-2 decreased the extent of beta-galactosidase expression in the mantle layer of the spinal cord limiting it to ventral regions at E11.5. At E14.5, these mutations eliminated most of the expression that was seen in the wild-type spinal cord. Taken together with our previous observations that the PBS binds multiple Pax proteins, the data indicate that such binding contributes to the regulation of N-CAM gene expression during neural development.