RE-1 silencer of transcription/neural restrictive silencer factor (REST/NRSF), a transcriptional repressor, binds to the RE-1 element present in many vertebrate genes. In vitro studies indicate that REST/NRSF plays important roles in several stages of neural development. However, a full understanding of its physiological function requires in vivo approaches. We find that impairment of REST/NRSF function in Xenopus embryos leads to the perturbation of neural tube, cranial ganglia, and eye development. The origin of these defects is the abnormal patterning of the ectoderm during gastrulation. Interference of REST/NRSF function during the late blastula stage leads to an expansion of the neural plate, concomitant with a decrease of the expression of epidermal keratin and neural crest markers. Furthermore, neurogenesis proceeds abnormally, with loss of the expression of proneural, neurogenic, and neuronal genes. The interference of REST/NRSF mimics several features associated with a decreased bone morphogenetic protein (BMP) function and counteracts some effects of BMP4 misexpression. Our results indicate that REST/NRSF function is required in vivo for the acquisition of specific ectodermal cell fates.