In the mouse mutant dysgenetic lens (dyl) the lens vesicle fails to separate from the ectoderm, causing a fusion between the lens and the cornea. Lack of a proliferating anterior lens epithelium leads to absence of secondary lens fibers and a dysplastic, cataractic lens. We report the cloning of a gene, FoxE3, encoding a forkhead/winged helix transcription factor, which is expressed in the developing lens from the start of lens placode induction and becomes restricted to the anterior proliferating cells when lens fiber differentiation begins. We show that FoxE3 is colocalized with dyl in the mouse genome, that dyl mice have mutations in the part of FoxE3 encoding the DNA-binding domain, and that these mutations cosegregate with the dyl phenotype. During embryonic development, the primordial lens epithelium is formed in an apparently normal way in dyl mutants. However, instead of the proliferation characteristic of a normal lens epithelium, the posterior of these cells fail to divide and show signs of premature differentiation, whereas the most anterior cells are eliminated by apoptosis. This implies that FoxE3 is essential for closure of the lens vesicle and is a factor that promotes survival and proliferation, while preventing differentiation, in the lens epithelium.