Both the activin and Wnt families of peptide growth factors are capable of inducing dorsal mesoderm in Xenopus embryos. Presumptive ventral ectoderm cells isolated from embryos injected with Xwnt8 mRNA were cultured in the presence of activin A to study the possible interactions between these two classes of signaling proteins. We find that overexpression of Xwnt8 RNA alters the response of ventral ectoderm to activin such that ventral explants differentiate dorsoanterior structures including notochord and eyes. This response is similar to the response of dorsal ectoderm to activin alone. When embryos are irradiated with uv light to inhibit dorsal axis formation, ectodermal explants differentiate notochord when they are induced by a combination of both signaling factors, but not when cells receive only one inducing signal (activin or Xwnt8). This result is further supported by the observation that goosecoid (gsc) mRNA, an early marker for dorsal mesoderm, is expressed in these explants only when they are injected with Xwnt8 mRNA followed by exposure to activin. Early morphogenetic movements of the induced cells and activation of muscle-specific actin and Brachyury (Xbra) genes also reveal a cooperation of activin A and Xwnt8 in mesoderm induction.