The semidominant mutation Liguleless3-O (Lg3-O) causes a blade-to-sheath transformation at the midrib region of the maize (Zea mays L.) leaf. We isolated a full-length Ig3 cDNA containing a knotted1-like family homeobox. Six Lg3-O partial revertant alleles caused by insertion of a Mutator (Mu) transposon and two deletion derivatives were isolated and used to verify that our knotted1-like cDNA corresponds to the LG3 message. In wild-type plants the LG3 mRNA is expressed in apical regions but is not expressed in leaves. In mutant plants harboring any of three dominant Ig3 alleles (Lg3-O, -MIg, and -347), LG3 mRNA is expressed in leaf sheath tissue, indicating that the Lg3 phenotype is due to ectopic expression of the gene. The Lg3-O revertant alleles represent two classes of Lg3 phenotypes that correlate well with the level of ectopic Lg3 expression. High levels of ectopic LG3 mRNA expression results in a severe Lg3 phenotype, whereas weak ectopic Lg3 expression results in a mild Lg3 phenotype. We propose that ectopic Lg3 expression early in leaf development causes the blade-to-sheath transformation, but the level of expression determines the extent of the transformation.