The vertebrate body plan is specified in the early embryo through the inductive influence of the organizer, a special region that forms on the dorsalmost side of the embryo at the beginning of gastrulation. In Xenopus, the homeobox gene Siamois is activated prior to gastrulation in the area of organizer activity and is capable of inducing a secondary body axis when ectopically expressed. To elucidate the function of endogeneous Siamois in dorsoventral axis formation, we made a dominant repressor construct (SE) in which the Siamois homeodomain was fused to an active repression domain of Drosophila engrailed. Overexpression of 1-5 pg of this chimeric mRNA in the early embryo blocks axis development and inhibits activation of dorsal, but not ventrolateral, marginal zone markers. At similar expression levels, SE proteins with altered DNA-binding specificity do not have the same effect. Coexpression of mRNA encoding wild-type Siamois, but not a mutated Siamois, restores dorsal development to SE embryos. Furthermore, SE strongly blocks axis formation triggered by beta-catenin but not by the organizer product noggin. These results suggest that Siamois function is essential for beta-catenin-mediated formation of the Spemann organizer, and that Siamois acts prior to noggin in specifying dorsal development.