In this study, the large-scale whole-mount in situ hybridization was employed to screen an activin-treated ectoderm cDNA library of Xenopus laevis, leading to the isolation of 51 novel cDNA sequences of Xenopus. So this approach turned out to be practicable for identification of new genes from a cDNA library in a large scale. XXBP-1, XMLP and XAT were selected for further functional studies based on their suggestive expression pattern. XXBP-1 is a novel basic leucine zipper transcription factor in Xenopus. It is a maternal factor and expressed on the dorsal blastopore lip and ventral ectoderm with exception of perspective neural plate in gastrula stages. RT-PCR indicated that XXBP-1 is weakly expressed before gastrula stages, afterwards is up-regulated and kept in a persistent level during the embryonic development. Overexpression of XXBP-1 leads to ventralization of the injected embryos as described for BMP-4. Moreover, XXBP-1 and BMP4 interact in a positive feedback loop. Consistent with mediating BMP-4 signaling, the ectopic expression of XXBP-1 partially recovers the expression of epidermal keratin in animal cap assay and converses the dorsolizaiton imposed by truncate BMP receptor I. Thus, we propose that the XXBP-1 is downstream of BMP receptors, and plays roles in the inhibition of neural differentiation. XXBP-1 functions as a transcriptional activator. When overexpressed ventrally, the effect of wild type XXBP-1 can be phencopied by the XXBP1-VP16 containing the activator domain VP16 and the DNA binding domain of XXBP-1. Another fusion construct, XXBP1-Eve containing the DNA binding domain of XXBP-1 and even-skipped repression domain induce neural markers NCAM and nrp1 in animal cap assay and leads to the secondary axis when overexpressed ventrally in a low ratio (10%). This confirms that XXBP-1 acts as an activator, playing negative roles in neural induction. The XMLP may be a new number of the small MLP protein family. Using whole-mount in situ hybridization and RT-PCR, XMLP maternal transcripts were detected during the cleavage stages. After MBT the signals are restricted to the neural plate.