A homeobox sequence has been used to isolate a new Xenopus cDNA, named XIHbox6. A short probe from this gene serves as an early marker of posterior neural differentiation in the Xenopus nervous system. The gene recognized by this cDNA sequence is first transcribed at the late gastrula stage and solely in the posterior neural cells. The gene is expressed when ectodermal and mesodermal tissues of an early gastrula are placed in contact, but not by either tissue cultured on its own. However, gene expression is most easily inducible in ectoderm from the dorsal region, i.e., in ectoderm normally destined to form neural structures. This establishes the principle, in contrast to previous belief, that the induction of the embryonic nervous system involves a predisposition of the ectoderm and does not depend entirely on an interaction with inducing mesoderm.