A polyclonal antibody against a glutathione S:-transferase fusion protein containing the 76 COOH-terminal amino acids of Hex, a divergent homeobox gene, was raised in rabbits. Western blot and immunofluorescence reveal that Hex is a 35-37-kD soluble protein present both in the nucleus and cytoplasm of transfected and nontransfected cultured cells as well as in whole mouse embryo. Confocal microscopy of whole mount immunostained mouse embryos at E7. 5 and E8.5 demonstrates that Hex is differentially localized in the cytoplasm and nucleus of definitive endoderm, developing blood islands, and hepatic diverticulum. In particular, in the region of the foregut that gives rise to the liver, Hex expression is nuclear in the endodermal cells of the hepatic diverticulum, whereas expression is primarily cytoplasmic in cells lateral to the liver-forming region. This suggests that nuclear localization of Hex is involved in early hepatic specification and that compartmentalization of Hex protein plays an important role in its function during mouse development.