We describe the homeobox gene ceh-10 from the nematode Caenorhabditis elegans. The homeodomain of ceh-10 is closely related to the homeodomains of two genes recently cloned from the vertebrate retina, Chx10 from mice and Vsx-1 from goldfish. We show that the sequence conservation extends well beyond the homeodomain and includes a region (named the CVC domain) of roughly 60 amino acids immediately C-terminal to the homeodomain. As assayed in transgenic worms, the promoter region of ceh-10 directs expression of a lacZ reporter gene to a small number of neurons. We draw a parallel between the bipolar cells of the inner nuclear layer of the vertebrate retina, which express Chx10 and Vsx-1, and an interneuron in C. elegans called AIY, which expresses ceh-10. AIY receives synaptic input from a sensory cell, just as do bipolar cells of the vertebrate retina. In C. elegans, the sensory cell AFD is not known to be photosensitive but is known to be thermosensitive; moreover, a cell with similar position in the amphids of other nematodes has been suggested indeed to be photosensitive. Our results emphasize the highly conserved nature of sensory regulatory mechanisms and suggest one way in which photosensitive organelles might have originated in evolution.