The first inductive interaction in amphibian development is mesoderm induction, when a signal from the vegetal hemisphere of the blastula induces mesoderm from overlying equatorial cells. Recently, several 'mesoderm-inducing factors' (MIFs) have been discovered. These cause isolated Xenopus animal caps to form mesodermal cell types such as muscle, instead of their normal fate of epidermis. The MIFs fall into two classes. One comprises members of the fibroblast growth factor (FGF) family, and the other members of the transforming growth factor type beta (TGF-beta) family. Of the latter group, the most potent is XTC-MIF, a protein produced by Xenopus XTC cells. Here we show that XTC-MIF is the homologue of mammalian activin A. Activins modulate the release of follicle-stimulating hormone from cultured anterior pituitary cells and cause the differentiation of two erythroleukaemia cell lines. Our results indicate that these molecules may also act in early development during formation of the mesoderm.