The transcription start site and DNA sequence elements required for the induction of Pax3 expression in differentiating P19 embryonal carcinoma cells have been localized. These elements consist of a promoter and additional elements located within 1.6 kbp 5′ to the transcription start site. Sequence elements within this 1.6 kbp region are also sufficient to mediate the induction and dorsal restriction of Pax3 in the neural tube and somites of transgenic mice throughout the hindbrain and trunk. Additional elements required for expression anterior to the hindbrain and in migrating myoblasts are located within 14 kbp 5′ to the transcription start site. This region also contains element(s) that repress Pax3 expression in the ventral body wall mesoderm of the tail bud.