XATH-1, a basic/helix-loop-helix transcription factor and a homolog of Drosophila atonal and mammalian MATH-1, is expressed specifically in the dorsal hindbrain during Xenopus neural development. In order to investigate the role of XATH-1 in the neuronal differentiation process, we have examined the effects of XATH-1 overexpression during Xenopus development. XATH-1 induces the expression of neuronal differentiation markers, such as N-tubulin, within the neural plate as well as within nonneural ectodermal progenitor populations, resulting in the appearance of process-bearing neurons within the epidermis. The related basic/helix-loop-helix genes neurogenin-related-1 and neuroD are not induced in response to XATH-1 overexpression within the embryo, suggesting that XATH-1 may activate an alternate pathway of neuronal differentiation. In further contrast to neurogenin-related-1 and neuroD, high-level expression of general neural markers expressed earlier in development, such as N-CAM, is not induced by XATH-1 overexpression. Competent ectodermal progenitors therefore respond to ectopic XATH-1 expression by initiating a distinct program of neuronal differentiation.