A gene family encoding the fork head/HNF-3 domain has been identified in the South African clawed frog, Xenopus laevis. Screening of genomic DNA and gastrula stage derived cDNA libraries with a DNA fragment encoding the Drosophila fork head domain led to the isolation of a number of different clones encoding this motif. While one of the Xenopus fork head sequences, XFD-3, represents the Xenopus counterpart to rat HNF-3 beta, all other sequences encode novel types of fork head related proteins. Here we report on XFD-1, a DNA binding protein which can bind to the HNF-3 alpha target sequence. Analysis of temporal and spatial expression revealed that the gene is activated at blastula stage and that transcripts are localized in a rather thin stripe of cells invaginating the dorsal blastopore lip (organizer) during gastrulation. XFD-1 mRNA is localized within the notochord and, by the end of neurulation, is no longer detectable. In the animal cap assay the gene is activated by incubation with the vegetalizing factor (activin A) but not with bFGF.