The ontogeny of colonial animals is markedly distinct from that of solitary animals, yet no regulatory genes have thus far been implicated in colonial development. In cnidarians, colony ontogeny is characterized by the production of a nexus of vascular stolons, from which the feeding and reproductive structures, called polyps, are budded. Here we describe and characterize the Gsx parahox gene, Cnox-2, in the colonial cnidarian Hydractinia symbiolongicarpus of the class Hydrozoa. Cnox-2 is expressed in prominent components of the colony-wide patterning system; in the epithelia of distal stolon tips and polyp bud rudiments. Both are regions of active morphogenetic activity, characterized by cytologically and behaviorally distinct epithelia. Experimental induction and elimination of stolonal tips result in up- and down-regulation, respectively, of Cnox-2 expression. In the developing polyp, Cnox-2 expression remains uniformly high throughout the period of axial differentiation. The differential oral-aboral Cnox-2 expression in the epithelia of the mature polyp, previously described for this and another hydrozoan, arises after oral structures have completed development. Differential Cnox-2 expression is, thus, associated with key aspects of patterning of both the colony and the polyp, a finding that is particularly striking given that polyp and colony form are dissociable in the evolution of Hydrozoa.