Expression of thyroglobulin (Tg) and thyroperoxidase (TPO) genes in thyroid follicular cells occurs in the mouse at embryonic day (E) 14.5. Two transcription factors, TTF‐1 and Pax‐8, have been implicated in transcriptional activation of Tg and TPO, even though the onset of their expression is at E9. 5, suggesting that additional events are necessary for transcriptional activation of Tg and TPO genes. We report in this paper the cloning of TTF‐2, a DNA binding protein that recognizes sites on both Tg and TPO promoters. TTF‐2 is a new forkhead domain‐containing protein whose expression is restricted to the endodermal lining of the foregut and to the ectoderm that will give rise to the anterior pituitary. TTF‐2 shows transient expression in the developing thyroid and anterior pituitary. In the thyroid, TTF‐2 expression is down‐regulated just before the onset of Tg and TPO gene expression, suggesting that this transcription factor plays the role in development of a negative controller of thyroid‐specific gene expression.