Signaling triggered by polypeptide growth factors leads to the activation of their target genes. Several homeobox genes are known to be induced in response to polypeptide growth factors in early Xenopus development. In particular, Xmsx-1, an amphibian homologue of vertebrate Msx-1, is well characterized as a target gene of bone morphogenetic protein (BMP). Here, using a dominant-negative form of Xmsx-1 (VP-Xmsx-1), which is a fusion protein made with the virus-derived VP16 activation domain, we have examined whether Xmsx-1 activity is required in the endogenous ventralizing pathway. VP-Xmsx-1 induced a secondary body axis, complete with muscle and neural tissues, when overexpressed in ventral blastomeres, suggesting that Xmsx-1 activity is necessary for both mesoderm and ectoderm to be ventralized. We have also examined the epistatic relationship between Xmsx-1 and another ventralizing homeobox protein, Xvent-1, and show that Xmsx-1 is likely to be acting upstream of Xvent-1. We propose that Xmsx-1 is required in the BMP-stimulated ventralization pathway that involves the downstream activation of Xvent-1.