Gadd45 genes encode a small family of multifunctional stress response proteins, mediating cell proliferation, apoptosis, DNA repair and DNA demethylation. Their role during embryonic development is incompletely understood. Here we identified Xenopus Gadd45b, compared Gadd45a, Gadd45b and Gadd45g expression during Xenopus embryogenesis, and characterized their gain and loss of function phenotypes. Gadd45a and Gadd45g act redundantly and double Morpholino knock down leads to pleiotropic phenotypes, including shortened axes, head defects and misgastrulation. In contrast, Gadd45b, which is expressed at very low levels, shows little effect upon knock down or overexpression. Gadd45ag double Morphants show reduced neural cell proliferation and downregulation of pan-neural and neural crest markers. In contrast, Gadd45ag Morphants display increased expression of multipotency marker genes including Xenopus oct4 homologs as well as gastrula markers, while mesodermal markers are downregulated. The results indicate that Gadd45ag are required for early embryonic cells to exit pluripotency and enter differentiation.