Xenopus cerberus (Xcer) is a cytokine expressed in anterior mesendoderm overlapping and surrounding Spemann's gastrula organiser. When misexpressed in blastomeres, Xcer can induce ectopic heads with well-defined brain, cement gland, olfactory placodes, cyclopic eye, and occasionally liver and heart. We report here the identification of mCer-1, a murine gene related to cerberus. Both mCer-1 and Xcer appear to belong to the cystine knot superfamily, which includes TGF beta s and BMPs. In Xenopus animal cap assays, mCer-1 and Xcer induced cement glands and markers of anterior neural tissue and endoderm, characteristic of BMP inhibition. Furthermore, both antagonised the ventrolateral mesoderm-inducing activity of coexpressed BMP4. In mouse embryos, mCer-1 was expressed at early gastrulation in a stripe of primitive endoderm along the future anterior side of the egg cylinder, a region essential for anterior patterning. A second phase of expression was detected in anterior embryonic mesendoderm, and by late-streak stages most of the anterior half of the embryo was positive, except for the node and cardiac progenitors. Expression was later seen in the cranial portion of the two most-recently formed somites and in two stripes within presomitic mesoderm. In embryos lacking Otx2, a homeogene with a demonstrated role in anterior patterning, mCer-1 was still expressed in an anterior zone, although often abnormally. The data suggest that mCer-1 shares structural, functional, and expression characteristics with Xcer and may participate in patterning the anterior of the embryo and nascent somite region, in part, through a BMP-inhibitory mechanism.