The expression pattern of the serine protease inhibitor gene Protease nexin-1 (PN-1) has been analyzed by in situ hybridization during embryonic nervous system development. PN-1 was found to be specifically expressed at the junction between the mes- and metencephalon (mid- and hindbrain). Transgenic embryos expressing the bacterial lacZ gene under the control of different fragments of the PN-1 upstream regulatory region were used to demarcate an enhancer sufficient for expression at this putative segmental border. Primary cell cultures derived from the embryonic neural tube at the level of the met-/mesencephalic junction were used to demonstrate a specific effect on transcriptional activity by basic fibroblast growth factor and Engrailed transcription factors, providing evidence that PN-1 is a target gene of these factors. The results of this study place PN-1 into the signaling cascade(s) considered to be important for the development of this junction and suggest a role for PN-1 in the establishment or maintenance of the differences between these adjacent neuromeres.