Smad-interacting protein-1 (SIP1), also known as deltaEF2, ZEB2 and zfhx1b, is essential for the formation of the neural tube and the somites. Overexpression of Xenopus SIP1 causes ectopic neural induction via inhibition of bone morphogenetic protein (BMP) signaling and inhibition of Xbra expression. Here, we report the functional analyses of 4 domain-deletion mutants of XSIP1. Deletion of the N-terminus zinc finger domain suppressed neural induction and BMP inhibition, but these were not affected by deletion of the other domains (the Smad binding domain, the DNA-binding homeodomain together with the CtBP binding site and the C-terminus zinc finger). Therefore SIP1 does not inhibit BMP signaling by binding to Smad proteins. In contrast, all of the deletion constructs inhibited Xbra expression. These results suggest that the N-terminus zinc finger domain of XSIP1 has an important role in neural induction and that Xbra suppression occurs via a mechanism separate from the neural inducing activity.