The transcription factor Pax8 is expressed in the developing thyroid gland, inner ear, kidney, and mid‐hindbrain region. Pax8 mutant mice die only postnatally due to a thyroid gland defect. Here we report the generation and expression analysis of a Pax8^cre allele. Cre recombinase activity was detected in known Pax8 expression domains of Pax8^cre/+ and Pax8^cre/cre embryos carrying the Z/AP transgene, which expresses alkaline phosphatase only after Cre‐mediated excision of lacZ sequences. Alkaline phosphatase expression was additionally detected in the adrenal gland and in the facial, vestibulocochlear, and cuneate nerves, which have so far not been associated with Pax8 expression. Our data indicate that the Pax8^cre allele provides a novel important tool for conditional gene manipulation and lineage tracing in different Pax8 expression domains. genesis 38:105–109, 2004. © 2004 Wiley‐Liss, Inc.