T/EBP/NKX2.1, also known as TTF-1, is a homeodomain-containing transcription factor that is expressed in lung, thyroid, and a part of the brain (15, 21, 22, 28). T/EBP/NKX2.1 was originally characterized as a transcription factor that regulates expression of thyroid-specific genes such as those encoding thyroglobulin (7), thyroid peroxidase (7, 11, 20), TSH receptor (6, 37), and the Na/I symporter (10). In the lung, T/EBP/NKX2.1 is expressed in all epithelial cells early during pulmonary morphogenesis, but the expression becomes progressively restricted to alveolar type II and Clara cells towards the end of gestation and in postnatal days (46). T/EBP/NKX2.1 activates transcription of genes specifically expressed in lung, including the genes for surfactant proteins A (2), B (1), and C (19) and Clara cell secretory protein (also called uteroglobin) genes (34, 35). Targeted disruption of the T/ebp/Nkx2.1 locus was shown to result in immediate postnatal death due to respiratory failure caused by profoundly hypoplastic lungs (21, 26). These mice also lack the thyroid, pituitary, and parts of the ventral forebrain such as the hypothalamus and basal ganglia (21, 41, 42). Detailed analyses of the T/ebp/Nkx2.1-null mouse respiratory system revealed that T/EBP/NKX2.1 may function in the establishment of pattern formation of early pulmonary structure and pulmonary morphogenesis during embryonic development (26). A role for T/EBP/NKX2.1 in pulmonary morphogenesis was also suggested by in vitro experiments in which a T/EBP/NKX2.1 antisense oligonucleotide inhibited normal branching morphogenesis in lung organ culture (25). Based on these results, it is hypothesized that lung branching morphogenesis must be related to the ability of T/EBP/NKX2.1 to activate and/or suppress specific downstream target genes. One such category of target genes in lung consists of the surfactant proteins A (2), B (1), and C (19) and Clara cell secretory protein genes (34, 35). However, they are not known to have morphoregulatory function. Extensive studies have shown that epithelial-mesenchymal interaction plays an instructive role in lung branching morphogenesis (3, 17, 24, 45). In this context, a possible function for T/EBP/NKX2.1 may be in activation of epithelial cell pathways that are necessary for receiving and/or interpreting the instructive signals that originate from the mesenchyme. In this role, downstream target genes for T/EBP/NKX2.1 would potentially include those encoding cell surface receptors, components of the signal transduction pathway, and/or a variety of other factors connecting the cell surface to changes in gene expression and cellular behavior. In T/ebp/Nkx2.1-null embryo lungs, expression of some extracellular matrix proteins and their cellular receptors, including collagen type IV and α integrins, and some growth factors such as VEGF3 and BMP4 is reduced or absent (46). Whether the abnormal phenotype in T/ebp/Nkx2.1-null embryo lungs is entirely or partially due to the reduction or absence of expression of these genes remains to be examined. Among possible target genes are those encoding elements of tight junctions (TJs), a specialized membrane domain at the most apical region of polarized epithelial cells that creates a primary barrier to prevent paracellular transport of solutes and restrict the lateral diffusion of membrane lipids and proteins to maintain cellular polarity (4, 5, 23, 27, 40, 44). Claudins, products of a recently identified multigene family, are components of TJ strands and have four transmembrane domains and two extracellular loops with both NH2 and COOH termini in the cytoplasm (29, 43). Claudins have several functional characteristics consistent with a role in barrier formation and dependent on the specific claudin species that exhibit tissue specificity (27, 29). Claudin-1 and -2 have the ability to induce the formation of networks of strands and grooves at cell-cell contact sites when introduced into fibroblasts lacking TJs (12). Both claudin-3 and -4 are receptors for a cytotoxic enterotoxin (CPE) produced by the bacterium Clostridium perfringens, and the interaction with CPE results in increased membrane permeability by forming small pores in plasma membrane (39). A claudin-11 (oligodendrocyte-specific protein) knockout mouse showed the absence of TJ strands in central nervous system myelin and Sertoli cells in testis (14). Mutations in human claudin-16 (paracellin-1) cause renal hypomagnesemia with hypercalciuria and nephrocalcinosis, suggesting that it creates a channel that allows magnesium to diffuse through renal TJs (38). To date, at least 20 members of the claudin gene family have been identified (27). However, many of these claudins have not yet been examined in detail, and the functional differences are largely unknown. Here, we isolated and characterized a novel member of claudin gene family, claudin-18, which has two isoform transcripts produced by alternative splicing that exhibit lung- and stomach-specific expression. Further, claudin-18 has a splicing variant lacking the C-terminal cytoplasmic domain. Analysis of the promoter function of the mouse claudin-18 gene suggests that the lung-specific form is a downstream target gene regulated by the T/EBP/NKX2.1 homeodomain transcription factor.