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Pax genes encode evolutionarily conserved transcription factors that play critical roles in embryonic development and organogenesis. Pax proteins are subdivided into four subfamilies: group I (Pax1and 9), II (Pax2, 5, and 8), III (Pax3 and 7), and IV (Pax4 and 6), based on the presence of a paired domain, an octapeptide motif and part or all of the homeodomain. Studies of the evolution of this gene family are incomplete. Nevertheless, it is known that each family evolved via duplication from four corresponding ancestral genes. Pax gene functions have been shown to be conserved within subgroups. It remains unclear, however, whether any (early) conserved function is shared between subgroups. To investigate conserved functions between subfamily II and III, we replaced an allele of Pax3 with a Pax8-coding sequence via gene targeting in the mouse. Homozygote Pax3Pax8/Pax8 embryos display phenotypes indistinguishable from Pax3-deficient mutant embryos, with neural tube closure defects, a deficit in neural crest cells in the trunk, and skeletal muscle defects including absence of long-range migratory myogenic progenitors and impaired somite development. Interestingly, despite Pax8 expression in the neural tube in a domain ventral to that of Pax3, Pax8 cannot replace Pax3 function in the dorsal neural tube. Altogether, our results demonstrate that expression of Pax8 fails to compensate for Pax3 deficiency, demonstrating the absence of functional compensation between one subfamily of Pax genes and another in the mouse embryo. Our result suggests that Pax3/7 and Pax2/5/8 functions evolved independently after duplication of the ancestral progenitor Pax genes.