Dlx genes encode a developmentally important family of transcription factors with a variety of functions and sites of action during vertebrate embryogenesis. The murine Dlx4 gene is an enigmatic member of the family; little is known about the normal developmental function(s) of Dlx4. Here, we show that Dlx4 is expressed in the murine placenta and in a trophoblast cell line where the protein localizes to both the nucleus and cytoplasm. Despite the presence of several leucine/valine-rich motifs that match known nuclear export sequences, cytoplasmic Dlx4 is not due to CRM-1-mediated nuclear export. Rather, nuclear import of Dlx4 is compromised by specific residues that flank the nuclear localization signal. One of these residues represents a novel conserved feature of the Dlx4 protein in placental mammals, and the second represents novel variation within mouse Dlx4 isoforms. Comparison of orthologous protein sequences reveals a particularly high rate of non-synonymous change in the coding regions of mammalian Dlx4 genes. Since impaired nuclear localization is unlikely to enhance the function of a nuclear transcription factor, these data point to reduced selection pressure as the basis for the rapid divergence of the Dlx4 gene within the mammalian clade.