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In vertebrate embryogenesis, the primordia of the nervous systems arise from uncommitted ectoderm during gastrulation. Spemann and Mangold demonstrated that the dorsal lip of the amphibian blastopore, which gives rise mainly to axial mesoderm, emanates inductive factors that direct neural differentiation in the ectoderm. During the last decade, much progress has been made in the molecular understanding of early neural differentiation in Xenopus. Neural inducer molecules, such as chordin, noggin and follistatin, were identified, and several intracellular mediators of neural differentiation have been characterized (1-3). These neural inducers do not have their own receptors on target cells, instead they act by binding to and inactivating bone morphogenfic protein 4 (BMP4), which suppresses neural differentiation and promotes epidermogenesis. Noggin and chordin bind to BMP with dissociation constants comparable to that of BMP receptors to BMP (4,5). Thus, neural induction in Xenopus is controlled by a morphogenetic signaling involving a BMP activity gradient. [ABSTRACT FROM AUTHOR]