Members of the fibroblast growth factor (FGF) ligand family play a critical role in mesoderm formation in the frog Xenopus laevis. While many components of the signaling cascade triggered by FGF receptor activation have been identified, links between these intracellular factors and the receptor itself have been difficult to establish. We report here the characterization of Xenopus SNT-1 (FRS2alpha), a scaffolding protein previously identified as a mediator of FGF activity in other biological contexts. SNT-1 is widely expressed during early Xenopus development, consistent with a role for this protein in mesoderm formation. Ectopic SNT-1 induces mesoderm in Xenopus ectodermal explants, synergizes with low levels of FGF, and is blocked by inhibition of Ras activity, suggesting that SNT-1 functions to transmit signals from the FGF receptor during mesoderm formation. Furthermore, dominant-inhibitory SNT-1 mutants inhibit mesoderm induction by FGF, suggesting that SNT-1 is required for this process. Expression of dominant-negative SNT-1 in intact embryos blocks mesoderm formation and dramatically disrupts trunk and tail development, indicating a requirement for SNT-1, or a related factor inhibited by the mutant construct, during axis formation in vivo. Finally, we demonstrate that SNT-1 physically associates with the Src-like kinase Laloo, and that SNT-1 activity is required for mesoderm induction by Laloo, suggesting that SNT-1 and Laloo function as components of a signaling complex during mesoderm formation in the vertebrate.