Mutations at the nude locus of mice and rats disrupt normal hair growth and thymus development, causing nude mice and rats to be immune-deficient. The mouse nude locus has been localized on chromosome 11 (refs 3, 4) within a region of < 1 megabase. Here we show that one of the genes from this critical region, designated whn, encodes a new member of the winged-helix domain family of transcription factors, and that it is disrupted on mouse nu and rat rnuN alleles. Mutant transcripts do not encode the characteristic DNA-binding domain, strongly suggesting that the whn gene is the nude gene. Mutations in winged-helix domain genes cause homeotic transformations in Drosophila and distort cell-fate decisions during vulval development in Caenorhabditis elegans. The whn gene is thus the first member of this class of genes to be implicated in a specific developmental defect in vertebrates.