Using a paracrine assay to screen for signaling proteins that could respecify ectodermal tissue, we isolated a Xenopus gene related to the mouse gene nodal, a member of the TGFbeta superfamily. The gene is expressed in three regions in the early Xenopus embryo: first in the gastrula organizer, then in two stripes of cells flanking the posterior notochord in late neurulae, and finally in lateral plate mesoderm restricted to the left side of tailbud-stage embryos. Ectopic expression of the gene induces muscle formation in ectodermal explants and partial secondary axes in whole embryos. Together with noggin, another secreted protein also present in the organizer, it induces notochord formation in ectodermal explants and complete secondary axes in whole embryos. These results suggest that the nodal-related gene may act together with noggin to induce axial pattern during gastrulation and also may play a role in left-right asymmetry generation in the post-gastrula embryo.