XHNF1(&bgr;) is a homeobox-containing gene initially expressed at the blastula stage in the vegetal part of the Xenopus embryo. We investigated its early role by functional ablation, through mRNA injection of an XHNF1(beta)/engrailed repressor fusion construct (XHNF1(beta)/EngR). Dorsal injections of XHNF1(beta)/EngR mRNA abolish dorsal mesoderm formation, leading to axial deficiencies; ventral injections disrupt ventral mesoderm formation without affecting axial development. XHNF1(beta)/EngR phenotypic effects specifically depend on the DNA-binding activity of its homeodomain and are fully rescued by coinjection of XHNF1(beta) mRNA. Vegetal injection of XHNF1(beta)/EngR mRNA blocks the mesoderm-inducing ability of vegetal explants. Both B-Vg1 and VegT maternal determinants trigger XHNF1(beta) expression in animal caps. XHNF1(beta)/EngR mRNA blocks B-Vg1-mediated, but not by eFGF-mediated, mesoderm induction in animals caps. However, wild-type XHNF1(beta) mRNA does not trigger Xbra expression in animal caps. We conclude that XHNF1(beta) function is essential, though not sufficient, for mesoderm induction in the Xenopus embryo.