Injection of RNA encoding BMP-4 into the early Xenopus embryo suppresses formation of dorsal and anterior cell types. To understand this phenomenon, it is necessary to know the stage at which BMP-4 acts. In this paper, we present three lines of evidence showing that BMP-4 misexpression has no effect on the initial steps of mesoderm induction, either dorsal or ventral, but instead causes ventralization during gastrulation. Firstly, activation of organizer-specific genes such as goosecoid, Xnot, pintallavis and noggin occurs normally in embryos injected with BMP-4 RNA, but transcript levels are then rapidly down-regulated as gastrulation proceeds. Similarly, BMP-4 does not affect the initial activation of goosecoid by activin in animal caps, but expression then declines precipitously. Secondly, embryos made ventral by injection with BMP-4 RNA cannot be rescued by grafts of Spemann's organizer at gastrula stages. Such embryos therefore differ from those made ventral by UV-irradiation, where the defect occurs early and rescue can be effected by the organizer. Finally, the dorsalizing effects of the organizer, and of the candidate dorsalizing signal noggin, both of which exert their effects during gastrulation, can be counteracted by BMP-4. Together, these experiments demonstrate that BMP-4 can act during gastrulation both to promote ventral mesoderm differentiation and to attenuate dorsalizing signals derived from the organizer.