Msx is a homeodomain-containing transcriptional factor that plays an essential role in pattern formation in vertebrata and invertebrata embryos. In Xenopus laevis, two msx genes have been identified (Xmsx-1 and Xmsx-2). In the present study, we attempted to elucidate the expression and function of Xmsx-2B (formerly designated as Xhox7.1′) in early embryogenesis. Whole mount in situ hybridization analyses showed that the expression pattern of Xmsx-2B at gastrula and neurula stages was very similar to that of Xmsx-1: the transcript of Xmsx-2B was observed in ventral and lateral sides of the embryo. At the tailbud stage, however, the expression pattern of Xmsx-2B in neural tissues was distinct from that of Xmsx-1. An RNA injection experiment revealed that, like BMP-4, Xmsx-2B has a strong ventralizing activity. In the Xmsx-2B -injected embryos, differentiation of axial structures such as the notochord, muscle, and neural tissue was completely suppressed, whereas α-globin mRNA, a blood cell marker, was highly expressed. Simultaneous injection of Xmsx-1 and Xmsx-2B RNAs showed that they function in an additive manner. It was also shown that coinjection of Xmsx-2B with a dominant-negative BMP-4 receptor (tBR), which can induce formation of secondary axis when injected alone in ventral blastomeres, suppressed secondary axis formation. Furthermore, Xmsx-2B also suppressed secondary axis formation, which was induced by a dominant-negative form of Xmsx-1 (VP16/msx-1). Therefore, like Xmsx-1, Xmsx-2B is a downstream nuclear factor of the BMP-4-derived ventralizing signal, and these two factors probably share the same target molecules. In conclusion, Xmsx-1 and Xmsx-2B function in dorso-ventral axis formation in early Xenopus laevis development.