Spemann's organizer develops in response to dorsal determinants that act via maternal components of the wnt pathway. The function of siamois, a wnt-inducible homeobox gene, in Spemann's organizer development was examined by fusion of defined transcriptional regulatory domains to the siamois homeodomain. Similar to native siamois, a VP16 activator fusion induced axis formation, indicating that siamois functions as a transcriptional activator in axis induction. Fusion of the engrailed repressor generated a dominant inhibitor that blocked axis induction by Xwnt8, beta-catenin, and siamois, and repressed wnt activation of the goosecoid promoter. Dorsal injection of the engrailed-siamois fusion resulted in complete inhibition of dorsal development and organizer gene expression, an effect rescued by siamois, but not by Xwnt8 or beta-catenin. Thus, as a zygotic mediator of maternal dorsal signals, siamois function is required for development of Spemann's organizer.