After fertilization of Xenopus eggs, the cortex rotates relative to the cytoplasm, resulting in the formation of a cytoplasmic and transplantable dorsal-determining activity opposite the sperm entry point. This activity induces the dorsal expression of regulatory genes, which in turn establishes the Spemann organizer at the start of gastrulation. There has been considerable debate as to whether Vg1, or components of the Wnt-1 signaling pathway, normally function as this early dorsal determinant. Experiments now support the hypothesis that beta-catenin, a component of the Wnt pathway, provides the initial dorsoventral polarity to the embryo, and that Vg1 functions at a subsequent step in development. Specifically, beta-catenin is required for formation of the endogenous axes, and it is expressed at greater levels in dorsal cells during the early cleavage stages. Moreover, on the dorsal side of the embryo, complexes of beta-catenin and Tcf-3 directly bind the promoter of the dorsal regulatory genes siamois and twin and facilitate their expression, thereby contributing to the subsequent formation of the Spemann organizer. On the ventral side of the embryo, Tcf-3 likely works in the absence of beta-catenin as a transcriptional repressor of siamois. These and other data are considered in the context of how the initial polarization of the fertilized egg by the localized accumulation of beta-catenin establishes a range of subsequent dorsoventral asymmetries in the embryo.