Pax genes encode highly conserved transcription factors vital for metazoan development. Pax transcripts, particularly those in Group II (Pax2/5/8), are extensively alternatively spliced. This study compares the transcriptional activation capacity and developmental stage-specific expression of major isoforms of Group II Pax proteins in amphioxus (Branchiostoma floridae) and in Xenopus laevis. The comparison reveals considerable divergence of splice forms between the lineages, with the X. laevis Group II Pax genes (Pax2, Pax5, and Pax8) possessing a greater repertoire of regulated and functionally distinct splice forms than the single amphioxus gene (Pax2/5/8). Surprisingly, some apparently conserved splice forms are expressed at quite different levels during development in the two organisms and present different capacities to activate transcription. However, despite this divergence, the combinatorial transcriptional activation capacity of the isoforms present in early X. laevis and amphioxus development are broadly similar. This suggests that the some of the conserved functional roles, implied by the expression of Group II Pax genes in homologous tissues of amphioxus and X. laevis embryos, may depend upon the combination of isoforms expressed in a particular tissue at a particular time in development. Thus, during early development, the evolutionary constraint on the net effect of several isoforms co-expressed in a given tissue may be more strict than that on specific isoforms. This flexibility may facilitate the appearance of new exons and splicing patterns in the vertebrate duplicates, leading to isoforms with subtly distinct functions critical to the subsequent development of vertebrate-specific cell types and structures. J. Exp. Zool. (Mol. Dev. Evol.) 318B:555–571, 2012. © 2012 Wiley Periodicals, Inc.