One of the earliest markers of anterior asymmetry in vertebrate embryos is the transcription factor Hex. We find that Hex is a transcriptional repressor that can be converted to an activator by fusing full length Hex to two copies of the minimal transcriptional activation domain of VP16 together with the flexible hinge region of the (lambda) repressor (Hex-(lambda)VP2). Retention of the entire Hex open reading frame allows one to examine Hex function without disrupting potential protein-protein interactions. Expression of Hex-(lambda)VP2 in Xenopus inhibits expression of the anterior marker Cerberus and results in anterior truncations. Such embryos have multiple notochords and disorganised muscle tissue. These effects can occur in a cell non-autonomous manner, suggesting that one role of wild-type Hex is to specify anterior structures by suppressing signals that promote dorsal mesoderm formation. In support of this idea, over-expression of wild-type Hex causes cell non-autonomous dorso-anteriorization, as well as cell autonomous suppression of dorsal mesoderm. Suppression of dorsal mesoderm by Hex is accompanied by the down-regulation of Goosecoid and Chordin, while induction of dorsal mesoderm by Hex-(lambda)VP2 results in activation of these genes. Transient transfection experiments in ES cells suggest that Goosecoid is a direct target of Hex. Together, our results support a model in which Hex suppresses organiser activity and defines anterior identity.