We characterized Xenopus Zic5 which belongs to a novel class of the Zic family. Zic5 is more specifically expressed in the prospective neural crest than other Zic genes. Overexpression of Zic5 in embryos led to ectopic expression of the early neural crest markers, Xsna and Xslu, with the loss of epidermal marker expression. In Zic5-overexpressing animal cap explants, there was marked induction of neural crest markers, without mesodermal and anterior neural markers. This was in contrast to other Xenopus Zic genes, which induce both anterior and the neural crest markers in the same assay. Injection of a dominant-negative form of Zic5 can block neural crest formation in vivo. These results indicate that Zic5 expression converts cells from an epidermal fate to a neural crest cell fate. This is the first evidence for neural crest tissue inductive activity separate from anterior neural tissue inductive activity in a Zic family gene.