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In Drosophila the amount of neurogenic ectoderm, from which the central nervous system (CNS) derives, is regulated by a dorsal-ventral system of positional information in which two secreted molecules of antagonistic functions, decapentaplegic (dpp) and short-gastrulation (sog), play fundamental roles [1-4]. The vertebrate homologue of dpp is either bmp-4 or bmp-2 [5], and the homologue of sog is chd [4,6,7] (s-chordin). In Xenopus the CNS is induced by signals emanating from the organizer [8], and two proteins secreted by the organizer, noggin [9] and follistatin [10], have been shown to induce neural tissue in animal-cap assays. Here we report that Chd, another organizer-specific secreted factor [6], has neuralizing activity and that this activity can be antagonized by Bmp-4. Inhibition of the function of the endogenous Bmp-4 present in the animal cap [11] also leads to neural differentiation. We suggest that conserved molecular mechanisms involving chd/sog and bmp-4/dpp gene products pattern the ectoderm in Xenopus and in Drosophila.

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