The use of Cre and FLP recombinases to analyze embryogenesis and organogenesis in Xenopus has not been applied so far. We report on the generation of transgenic Xenopus animals containing a Cre-activated reporter gene cassette expressing blue fluorescent protein that can be switched over to yellow fluorescent protein expression upon Cre-mediated recombination. By injecting Cre mRNA into the two-cell stage embryo we show that Cre-mediated activation of the yellow fluorescent protein gene occurs. In addition, we observe upon injection an extinction of blue fluorescence in animals expressing the transgene and the induction of blue fluorescence in larvae containing a silent reporter gene. By crossing the reporter strains with animals expressing a muscle-specific Cre transgene we obtained an efficient and specific recombination of the reporter gene that leads to yellow fluorescence in myotomes and myofibrils of the developing larvae. Removal of the tail tips of these larvae allows the continuous recording of muscle cell differentiation in the regenerating tail. We detect a dramatic increase in transgene expression at the site of tissue removal in the tail stump. In the regenerated tail, yellow fluorescence is restricted to the myotomes thus excluding transdifferentiation of muscle cells.