During embryonic development, regulation of the zygotic genome may be mediated by inductive interactions and by cell-autonomous inheritance of informational material from the egg; we have studied certain aspects of such regulatory events in Xenopus laevis. Embryos cultured in Ca2+/Mg2+-free medium can be dissociated and dispersed, eliminating cell-cell contact and thus precluding inductive interactions. Such manipulations revealed that activation of the muscle-specific alpha-actin genes is absolutely dependent upon cell contacts. Conversely, the endoderm-specific DG42 gene and the ectoderm-specific DG81 cytokeratin gene are activated in embryo cells dispersed throughout blastula stages and therefore appear to be controlled by inherited factors. Nevertheless, abnormal cell arrangements may prevent expression of the cytokeratin gene, suggesting that animal pole cells can be diverted from their normal ectodermal fate by inductive contact with vegetally derived cells. The interactions required for alpha-actin induction and inhibition of cytokeratin expression are independent of strong adhesion between embryonic cells mediated by high concentrations of divalent cations.