The cellular mechanisms responsible for the formation of the Xenopus nervous system have been examined in total exogastrula embryos in which the axial mesoderm appears to remain segregated from prospective neural ectoderm and in recombinates of ectoderm and mesoderm. Posterior neural tissue displaying anteroposterior pattern develops in exogastrula ectoderm. This effect may be mediated by planar signals that occur in the absence of underlying mesoderm. The formation of a posterior neural tube may depend on the notoplate, a midline ectodermal cell group which extends along the anteroposterior axis. The induction of neural structures characteristic of the forebrain and of cell types normally found in the ventral region of the posterior neural tube requires additional vertical signals from underlying axial mesoderm. Thus, the formation of the embryonic Xenopus nervous system appears to involve the cooperation of distinct planar and vertical signals derived from midline cell groups.