A novel paired-like homeobox gene, designated as Qrx, was identified by a yeast one-hybrid screen using the bovine Rhodopsin promoter Ret-1 DNA regulatory element as bait. Qrx is preferentially expressed in both the outer and inner nuclear layers of the retina. Its homeodomain is nearly identical to that of Rx/Rax, a transcription factor that is essential for eye development, but it shares only limited homology elsewhere. Although Qrx and Rx/Rax show similar DNA binding properties in vitro, the two proteins demonstrate distinct target selectivity and functional behavior in promoter activity assays. QRX synergistically increases the transactivating function of the photoreceptor transcription factors Crx and NRL and it physically interacts with CRX. Qrx is present in the bovine and human genomes, but appears to be absent from the mouse genome. Nonetheless, a 5.8 kb upstream region of human QRX is capable of directing expression in presumptive photoreceptor precursor cells in transgenic mice. These results indicate that Qrx may be involved in modulating photoreceptor gene expression. In addition, the finding of rare heterozygous QRX sequence changes in three individuals with retinal degeneration raises the possibility that QRX may be involved in disease pathogenesis.