X-MyT1 is a C2HC-type zinc finger protein that we find to be involved in the primary selection of neuronal precursor cells in Xenopus. Expression of this gene is positively regulated by the bHLH protein X-NGNR-1 and negatively regulated by the Notch/Delta signal transduction pathway. X-MyT1 is able to promote ectopic neuronal differentiation and to confer insensitivity to lateral inhibition, but only in cooperation with bHLH transcription factors. Inhibition of X-MyT1 function inhibits normal neurogenesis as well as ectopic neurogenesis caused by overexpression of X-NGNR-1. On the basis of these findings, we suggest that X-MyT1 is a novel, essential element in the cascade of events that allows cells to escape lateral inhibition and to enter the pathway that leads to terminal neuronal differentiation.