In this paper we study Xotx2, a Xenopus homeobox gene related to orthodenticle, a gene expressed in the developing head of Drosophila. The murine cognate, Otx2, is first expressed in the entire epiblast of prestreak embryos and later in very anterior regions of late-gastrulae, including the neuroectoderm of presumptive fore- and mid-brain. In Xenopus, RNase protection experiments reveal that Xotx2 is expressed at low levels throughout early development from unfertilized egg to late blastula, when its expression level significantly increases. Whole-mount in situ hybridization shows a localized expression in the dorsal region of the marginal zone at stage 9.5. At stage 10.25 Xotx2 is expressed in dorsal bottle cells and in cells of the dorsal deep zone fated to give rise to prechordal mesendoderm, suggesting a role in the specification of very anterior structures. In stage 10.5 gastrulae, Xotx2 transcripts start to be detectable also in presumptive anterior neuroectoderm, where they persist in subsequent stages. Various treatments of early embryos cause a general reorganization of Xotx2 expression. In particular, retinoic acid treatment essentially abolishes Xotx2 expression in neuroectoderm. Microinjection of Xotx2 mRNA in 1-, 2- and 4-cell stage embryos causes the appearance of secondary cement glands and partial secondary axes in embryos with reduced trunk and tail structures. The presence of the Xotx2 homeodomain is required to produce these effects. In particular, this homeodomain contains a specific lysine residue at position 9 of the recognition helix. Microinjected transcripts of Xotx2 constructs containing a homeodomain where this lysine is substituted by a glutamine or a glutamic acid residue fail to cause these effects.