The latent TGF-beta binding proteins (LTBP) are believed to control the availability of TGF-beta in the extracellular milieu. To gain insight into the potential roles of LTBP in early development, we isolated the Xenopus LTBP-1 (xLTBP-1) cDNA. The cDNA encodes a protein similar to the mammalian LTBP-1 in both size and domain structure. In addition, we found a novel longer splice isoform of xLTBP. The RNAs for both forms of xLTBP displayed temporal regulation and the shorter transcript is expressed maternally. Both transcripts also display spatial regulation and are found in the dorsal mesoderm of the organizer. In animal cap experiments, LTBP-1 potentiates the activity of activin and nodal. The activity of LTBP-1 did not appear to require covalent association with activin as the addition of medium containing activin and LTBP-1 to animal caps enhanced the activin effect. These results indicate that LTBP-1 may be part of the regulatory system that establishes the threshold of morphogen activity for activins and nodals in the dorsal side of the embryo during gastrulation.