We have isolated the Xenopus fork head (fkh) box-containing gene XFKH2. XFKH2 appears to be most similar to the rat liver transcription factor HNF-3 alpha, with 64% amino acid identity throughout the protein and 96% amino acid identity within the fkh box. Dissection experiments demonstrate that XFKH2 is present in the vegetal pole and marginal zone but not the animal pole of gastrulae and in equal levels in the dorsal and ventral halves of both gastrulae and neurulae. By in situ hybridization, we know that the dorsal component of expression is concentrated in the notochord in neurulae. In tailbud embryos, XFKH2 is detected in the foregut, the brain, and in two lines of cells just dorsal and ventral to the notochord, the hypochord and the floor plate of the spinal cord. Finally, although explanted animal caps will turn on XFKH2 autonomously at midneurula stage, activin induces early expression at gastrula stage. The early, growth factor-dependent expression does occur in the presence of the protein synthesis inhibitor cycloheximide, suggesting that XFKH2 expression during gastrula stage may be an immediate early response to mesoderm induction.