The role of homeobox-containing genes in the regional specification of the vertebrate embryo has been an area of intense research over the last decade. Whereas it appears that the homeobox genes of the Hox gene family play an important role in the specification of the trunk, the genes and processes involved in the specification of the head are less well understood. We have isolated a new head-specific homeobox gene, XANF-2, that appears to be involved in the regional specification of the anterior head of Xenopus embryos. This gene is initially expressed in the anterior dorsal region of early embryos and later exclusively in the primordium of the anterior pituitary gland. XANF-2 represents the earliest marker for the anterior pituitary lineage. Ammonium chloride is able to induce the expression of XANF-2 in uncommitted ectoderm. These and other data indicate that ammonium chloride is capable of inducing a large portion of the anterior dorsal region of the embryo which includes, but is not limited to, the anterior pituitary gland and cement gland anlagen. This implies that changes in intracellular ionic conditions play an important role in the formation of the anterior head region. In addition to NH4Cl, injection of follistatin RNA can induce transcription of XANF-2, suggesting that these two unrelated compounds can activate a chain of events leading to the formation of the amphibian head. Furthermore, we demonstrate that planar induction in Keller sandwiches can induce XANF-2 expression as well as the expression of the cement gland-specific gene, XCG 13, indicating that planar signaling can account for induction of even the most anterior regions of the embryo.