The generation of anterior-posterior polarity in the vertebrate brain requires the establishment of regional domains of gene expression at early somite stages. Wnt-1 encodes a signal that is expressed in the developing midbrain and is essential for midbrain and anterior hindbrain development. Previous work identified a 5.5 kilobase region located downstream of the Wnt-1 coding sequence which is necessary and sufficient for Wnt-1 expression in vivo. Using a transgenic mouse reporter assay, we have now identified a 110 base pair regulatory sequence within the 5.5 kilobase enhancer, which is sufficient for expression of a lacZ reporter in the approximate Wnt-1 pattern at neural plate stages. Multimers of this element driving Wnt-1 expression can partially rescue the midbrain-hindbrain phenotype of Wnt-1(-/-) embryos. The possibility that this region represents an evolutionarily conserved regulatory module is suggested by the identification of a highly homologous region located downstream of the wnt-1 gene in the pufferfish (Fugu rubripes). These sequences are capable of appropriate temporal and spatial activation of a reporter gene in the embryonic mouse midbrain; although, later aspects of the Wnt-1 expression pattern are absent. Genetic evidence has implicated Pax transcription factors in the regulation of Wnt-1. Although Pax-2 binds to the 110 base pair murine regulatory element in vitro, the location of the binding sites could not be precisely established and mutation of two putative low affinity sites did not abolish activation of a Wnt-1 reporter transgene in vivo. Thus, it is unlikely that Pax proteins regulate Wnt-1 by direct interactions with this cis-acting regulatory region. Our analysis of the 110 base pair minimal regulatory element suggests that Wnt-1 regulation is complex, involving different regulatory interactions for activation and the later maintenance of transgene expression in the dorsal midbrain and ventral diencephalon, and at the midbrain-hindbrain junction.