The induction of developmental structures derived from the ectoderm, such a
s the neural tube or tooth, occurs through neutralization of the inhibitory
activity of members of the bone-morphogenetic protein (BMP) family by BMP
antagonists. Here we show that, during hair-follicle development, the neura
l inducer and BMP-neutralizing protein Noggin is expressed in the follicula
r mesenchyme, that noggin-knockout mice show significant retardation of hai
r-follicle induction, and that Noggin neutralizes the inhibitory action of
BMP-4 and stimulates hair-follicle induction in embryonic skin organ cultur
e. As a crucial mesenchymal signal that stimulates hair-follicle induction,
Noggin operates through antagonistic interactions with BMP-4, which result
in upregulation of the transcription factor Lef-1 and the cell-adhesion mo
lecule NCAM, as well as through BMP4-independent downregulation of the 75 k
D neurotrophin receptor in the developing hair follicle.