Lymphoid enhancer factor/T-cell factor (LEF/TCF) high mobility group box transcription factors are the nuclear transducers of the Wnt/beta-catenin signaling cascade. In Xenopus, three members of the LEF/TCF family, XLEF-1, XTCF-3, and XTCF-4, with distinct but partially overlapping expression patterns have been identified. The individual Xenopus LEF/TCF family members differ extremely in their properties of target gene regulation. We observed that in contrast to LEF-1, neither XTCF-3 nor XTCF-4 can induce secondary axis formation upon ventral overexpression in Xenopus embryos. To identify functional motifs within the LEF/TCF transcription factors responsible for target gene activation or repression, we created various mutants and a set of XLEF-1/XTCF-3 chimeras. In overexpression studies, we asked whether these constructs can mimic an activated Wnt/beta-catenin pathway and lead to the formation of a secondary body axis. In addition, we examined their capacity to rescue a loss-of-function phenotype given by dominant negative LEF-1 expression. We further analyzed their ability to directly activate target genes in reporter gene assays using the LEF/TCF target promoters, siamois and fibronectin. We found that a region homologous to exon IVa of human TCF-1 is an activating element. This is flanked by two small repressing motifs, LVPQ and SXXSS. Our findings implicate that the motifs identified here play an essential role in determining cell type-specific activity of LEF/TCF transcription factors.