In the mouse, the product of the nude locus, Whn, is required for the keratinization of the hair shaft and the differentiation of epithelial progenitor cells in the thymus. A bacterially expressed peptide representing the presumptive DNA binding domain of the mouse whn gene in vitro specifically binds to a 11-bp consensus sequence containing the invariant tetranucleotide 5′-ACGC. In transient transfection assays, such binding sites stimulated reporter gene expression about 30- to 40-fold, when positioned upstream of a minimal promotor. Whn homologs from humans, bony fish (Danio rerio), cartilaginous fish (Scyliorhinus caniculus), agnathans (Lampetra planeri), and cephalochordates (Branchiostoma lanceolatum) share at least 80% of amino acids in the DNA binding domain. In agreement with this remarkable structural conservation, the DNA binding domains from zebrafish, which possesses a thymus but no hair, and amphioxus, which possesses neither thymus nor hair, recognize the same target sequence as the mouse DNA binding domain in vitro and in vivo. The genomes of vertebrates and cephalochordates contain only a single whn-like gene, suggesting that the primordial whn gene was not subject to gene-duplication events. Although the role of whn in cephalochordates and agnathans is unknown, its requirement in the development of the thymus gland and the differentiation of skin appendages in the mouse suggests that changes in the transcriptional control regions of whn genes accompanied their functional reassignments during evolution.