In a screen for transcripts differentially expressed during gonadal development in mouse embryos, we identified the novel armadillo-related gene, Alex2. The armadillo (arm) family of proteins share a 42 amino acid tandem repeat motif called the arm domain, through which they interact with different binding partners. These intracellular proteins are implicated in a variety of developmental processes, including cell proliferation, migration, maintenance of tissue integrity, and tumorigenesis. Alex2 is a member of a novel subgroup within the arm family, encoding a protein with a single arm domain and a putative transmembrane or signal sequence. Alex2 has a developmentally regulated expression profile during embryogenesis in the mouse. In the urogenital system, it is strongly expressed in the developing testis but is down-regulated during ovarian development. Alex2 expression is localized within the interstitial cell lineage of the developing testis, which gives rise to peritubular myoid, endothelial, and fetal Leydig cells. Alex2 is also expressed in the developing forebrain and somites and in dorsal root ganglia. In testicular cell lines, Alex2 fusion proteins localize to membrane structures within the cell. The expression profile of Alex2 suggests that it plays a role in the development of several tissues during embryogenesis, notably testicular differentiation. In the developing testis, its expression profile suggests that Alex2 has a role in specification or development of the interstitial cell lineage. Developmental Dynamics 233:188–193, 2005. © 2005 Wiley-Liss, Inc.