We have determined that I-mfa, an inhibitor of several basic helix-loop-hel
ix (bHLB) proteins, and XIC, a Xenopus ortholog of human I-mf domain-contai
ning protein that shares a highly conserved cysteine-rich C-terminal domain
with I-mfa, inhibit the activity and DNA binding of the HMG box transcript
ion factor XTcf3. Ectopic expression of I-mfa or XIC in early Xenopus embry
os inhibited dorsal axis specification, the expression of the Tcf3/beta -ca
tenin-regulated genes siamois and Xnr3, and the ability of beta -catenin to
activate reporter constructs driven by Lef/Tcf binding sites. I-mfa domain
proteins can regulate both the Wnt signaling pathway and a subset of bHLH
proteins, possibly coordinating the activities of these two critical develo
pmental pathways.