The co-activation of Wnt signaling and concomitant inhibition of BMP signaling has previously been implicated in vertebrate neural patterning, as evidenced by the combinatorial induction of engrailed-2 and krox-20 in Xenopus. However, screens have not previously been conducted to identify additional potential target genes. Using a PCR-based screening method we determined that XA-1, xCRISP, UVS.2, two UVS.2-related genes, and xONR1 are induced in response to Xwnt-3a and a BMP-antagonist, noggin. Two additional genes, connexin 30 and retinoic acid receptor gamma were induced by Xwnt-3a alone. To determine whether any of the induced genes are direct targets of Wnt signaling, we focussed on engrailed-2. In the present study we show that the Xenopus engrailed-2 promoter contains three consensus binding sites for LEF/TCF, which are HMG box transcription factors which bind to beta-catenin in response to activation of the Wnt- 1 signaling pathway. An engrailed-2 promoter luciferase reporter construct containing these LEF/TCF sites is induced in embryo explant assays by the combination of Xwnt-3a or beta-catenin and noggin. These LEF/TCF sites are required for expression of engrailed-2, as a dominant negative Xtcf-3 blocks expression of endogenous engrailed-2 as well as expression of the reporter construct. Moreover, mutation of these three LEF/TCF sites abrogates expression of the reporter construct in response to noggin and Xwnt-3a or beta-catenin. We conclude that the engrailed-2 gene is a direct target of the Wnt signaling pathway, and that Wnt signaling works with BMP antagonists to regulate gene expression during patterning of the developing nervous system of Xenopus.