In this study we have investigated the organization and regulation of the mouse Hox-2.7 gene. There are several alternative transcripts some of which are conserved between mouse and humans. By Northern and in situ analysis we are able to identify at least three types of transcripts which are different in size and splicing pattern and have distinctly different boundaries of expression in the nervous system. One subset of the endogenous transcripts has a boundary of expression that corresponds to the adjacent Hox-2.8 gene instead of Hox-2.7. In another type of transcript there is an alternative reading frame which predicts a protein that has homology to an enzyme ATPase and suggests that a non-homeobox containing gene may be located in the Hox-2 cluster. A Hox-2.7-lacZ transgene is expressed in a similar pattern to the endogenous gene in that spatially-restricted domains of expression are seen in the branchial arches, neural tube, paraxial mesoderm (somites), cranial ganglia, neural crest and gut. However, the anterior boundaries of transgene expression only correspond to the subset of Hox-2.7 transcripts which map to the Hox-2.8 boundary. The proximity of a Hox-2.7 promoter to regions which regulate the adjacent Hox-2.6 gene and the expression of transgenic and endogenous transcripts in a Hox-2.8 pattern, suggest that regulatory elements may be shared by neighbouring genes to establish the complete expression pattern.