Formation of three germ layers is the most important event in early vertebrate development. Animal cap assays can be used to reproduce the in vivo induction of amphibian tissues in order to investigate the differentiation processes that occur in normal embryonic development. Activin treatment strongly and dose-dependently induces various types of mesodermal and endodermal tissue in cultured animal caps. Beating heart, pronephros, pancreas and cartilage can be induced by microsurgical manipulation and simultaneous treatment with activin and other factors. These in vitro induction systems will be helpful for elucidating the mechanisms of tissue induction and organ formation in vertebrate development.