The epithelium of the Spemann organizer plays an important role in emb
ryonic axis formation and transplantation experiments have shown that
epithelial organizer cells have potent axis-inducing potential. Known
axis-inducing molecules like noggin and chordin are not expressed in t
he epithelium and cannot account for its inductive properties. Xwnt-11
is expressed in the epithelium but has only poor dorsalizing activity
. In an expression screen for genes that are able to functionally coop
erate with Xwnt-11 we have identified a cDNA encoding Xenopus nodal-re
lated 3 (Xnr3), a member of the TGF-beta family, coexpressed with Xwnt
-11 in the organizer epithelium. Xwnt-11 and Xnr3 act highly cooperati
vely in inducing secondary embryonic axes and dorsalizing ventral meso
derm. Xwnt-11/Xnr3 interfere with BMP signalling without themselves in
ducing chordin or noggin. The results indicate that induction by the o
rganizer epithelium may result from the combinatorial action of instru
ctive Xnr3 and permissive Xwnt-11 signalling.