We have identified a Caenorhabditis elegans gene, nhr-2, that is a member of the nuclear hormone receptor superfamily of transcription factors and defines a new subclass of the superfamily. nhr-2 messenger RNA is expressed in the maternal germline and during the first half of embryogenesis. Zygotic expression of nhr-2 begins by the 16-cell stage, making it one of the earliest genes known to be transcribed in the embryo. Immunolocalization detects NHR-2 protein in embryonic nuclei as early as the 2-cell stage. The protein is present in every nucleus until the 16- to 20-cell stage. Subsequently, expression continues in many, but not all, cell lineages, becoming progressively restricted to the anterior and dorsal regions of the embryo and disappearing during the initial stages of morphogenesis. Disruption of nhr-2 function with antisense RNA results in embryonic and early larval arrest, indicating that the gene has an essential function in embryonic development. nhr-2 does not correspond to known mutations mapped to the same genetic interval, and will provide an entry point for further study of a heretofore uncharacterized zygotic gene regulatory pathway.