The ascidian tadpole larva is thought to be close to a prototype of the ancestral chordate. The vertebrate body plan is established by a series of inductive cellular interactions, whereas ascidians show a highly determinate mode of development. Recent studies however, suggest some roles of cell-cell interaction during ascidian embryogenesis. To elucidate the signaling molecules responsible for the cellular interaction, we isolated HrBMPb, an ascidian homologue of the vertebrate bone morphogenetic protein (BMP) gene, from Halocynthia roretzi. The amino acid sequence of HrBMPb closely resembled those of vertebrate BMP-2 and BMP-4 and of Drosophila Decapentaplegic (DPP). In addition to the sequence similarity, HrBMPb overexpression induced the ventralization of Xenopus embryos, suggesting functional conservation. The zygotic expression of HrBMPb was first detected around gastrulation. HrBMPb expression was maintained in some cells at the lateral edges of the neural plate through gastrulation to neurulation, although that in the presumptive muscle cells was downregulated. HrBMPb was not expressed in the presumptive epidermis during gastrulation. When HrBMPb mRNA was injected into fertilized Halocynthia eggs, cells that normally give rise to the neural tissue differentiated into epidermis, causing a loss of anterior neural tissue in the larva. In addition, HrBMPb might function synergistically with HrBMPa, an ascidian homologue of BMPs-5 to 8. However, HrBMPb overexpression did not affect differentiation of the notochord and muscle cells. These results suggest that HrBMPb functions as a neural inhibitor and as an epidermal inducer but not as a ventralizing agent in ascidian development.