Mutations in the nude locus in mice and rats produce the pleiotropic phenotype of hairlessness and athymia, resulting in severely compromised immune system. To identify the causative gene, we utilized modern tools and techniques of positional cloning. Specifically, spanning the region in which the nude locus resides, we constructed a genetic map of polymorphic markers, a physical map of yeast artificial chromosomes and bacteriophage P1 clones, and a transcription map of genes obtained by direct cDNA selection and exon trapping. We identified seven novel transcripts with similarity to genes from Drosophila, Caenorhabditis elegans, rat, or human and three previously identified mouse genes. Based on our transcription mapping results, we present a novel approach to estimate the number of genes in a region and estimate that the nude locus resides in a region approximately threefold enriched for genes. We confirm a recently published report that the nude phenotype is caused by mutations in a gene encoding a novel winged helix or fork head domain transcription factor, whn (Nehls et al., Nature 372: 103-107, 1994). We report as well the mutations in the rat rnu allele and the complete coding sequence of the rat whn mRNA.