It is thought that inositol-1,4,5-trisphosphate (Ins(1,4,5)P(3))-Ca(2+) signalling has a function in dorsoventral axis formation in Xenopus embryos; however, the immediate target of free Ca(2+) is unclear. The secreted Wnt protein family comprises two functional groups, the canonical Wnt and Wnt/Ca(2+) pathways. The Wnt/Ca(2+) pathway interferes with the canonical Wnt pathway, but the underlying molecular mechanism is poorly understood. Here, we cloned the complementary DNA coding for the Xenopus homologue of nuclear factor of activated T cells (XNF-AT). A gain-of-function, calcineurin-independent active XNF-AT mutation (CA XNF-AT) inhibited anterior development of the primary axis, as well as Xwnt-8-induced ectopic dorsal axis development in embryos. A loss-of-function, dominant negative XNF-AT mutation (DN XNF-AT) induced ectopic dorsal axis formation and expression of the canonical Wnt signalling target molecules siamois and Xnr3 (ref. 4). Xwnt-5A induced translocation of XNF-AT from the cytosol to the nucleus. These data indicate that XNF-AT functions as a downstream target of the Wnt/Ca(2+) and Ins(1,4,5)P(3)-Ca(2+) pathways, and has an essential role in mediating ventral signals in the Xenopus embryo through suppression of the canonical Wnt pathway.