Mesoderm induction in the amphibian embryo can be studied by exposing animal region explants (destined to become ectoderm) to appropriate stimuli and assaying the appearance of mesodermal products like alpha-actin messenger RNA. Transforming growth factor beta 2 (TGF-beta 2), but not TGF-beta 1, was active in alpha-actin induction, while addition of fibroblast growth factor had a small synergistic effect. Medium conditioned by Xenopus XTC cells (XTC-CM), known to have powerful mesoderm-inducing activity, was shown to contain TGF-beta-like activity as measured by a radioreceptor binding assay, colony formation in NRK cells, and growth inhibition in CCL64 cells. The activity of XTC-CM in mesoderm induction and in growth inhibition of CCL64 cells was inhibited partially by antibodies to TGF-beta 2 but not by antibodies to TGF-beta 1. Thus, a TGF-beta 2-like molecule may be involved in mesoderm induction.