We demonstrated previously that Xmsx-1 is involved in mesoderm patterning along the dorso-ventral axis, under the regulation of BMP-4 signaling. When Xmsx-1 RNA was injected into the dorsal blastomeres, a mass of muscle tissue formed instead of notochord. This activity was similar to that of Xwnt-8 reported previously. In this study, we investigated whether the activity of Xmsx-1 is related to the ventralizing signal and myogenesis promoting factor, Xwnt-8. Whole-mount in situ hybridization showed that Xmsx-1, Xwnt-8, and XmyoD were expressed in overlapping areas, including the ventro-lateral marginal zone at mid-gastrula stage. The expression of XmyoD was induced by the ectopic expression of either Xmsx-1 or Xwnt-8 in dorsal blastomeres, and Xwnt-8 was induced by the ectopic expression of Xmsx-1. On the other hand, the expression of Xmsx-1 was not affected by the loading of pCSKA-Xwnt-8 or dominant-negative Xwnt-8 (DN-Xwnt-8) RNA. In addition, Xmsx-1 RNA did not abrogate the formation of notochord if coinjected with DN-Xwnt-8 RNA. These results suggest that Xmsx-1 functions upstream of the Xwnt-8 signal. Furthermore, the antagonistic function of Xmsx-1 to the expression of organizer genes, such as Xlim-1 and goosecoid, was shown by in situ hybridization analysis and luciferase reporter assay using the goosecoid promoter construct. Finally if Xmsx-1/VP-16 fusion RNA, which was expected to function as a dominant-negative Xmsx-1, was injected into ventral blastomeres, a partial secondary axis formed in a significant number of embryos. In such embryos, the activity of luciferase, under the control of goosecoid promoter sequence, was significantly elevated at gastrula stage. These results led us to conclude that Xmsx-1 plays a central role in establishing dorso-ventral axis in gastrulating embryo, by suppressing the expression of organizer genes.