Isomers of retinoic acid are considered likely regulators of developmental pattern formation in vertebrate embryos. The orphan receptor COUP-TFI, which can alter cellular responses to retinoic acid in cultured cells, is expressed in distinct regions of the developing zebrafish and mouse anterior central nervous system. We asked if COUP-TFI can modulate retinoic acid signaling and anterior neural development in a vertebrate embryo by examining: (1) whether COUP-TFI could alter transcriptional responses to retinoic acid in Xenopus embryonic explants, and (2) whether misexpression of COUP-TFI could regulate anterior neural gene expression during early Xenopus development. The results from these studies show that COUP-TFI is a potent regulator of retinoic acid-induced gene expression in Xenopus embryonic cells, and that misexpression of COUP-TFI causes deficiencies in anterior neural structures and head development in Xenopus embryos with a concomitant change in anterior neural gene expression. These results support the proposition that COUP-TFI has a role in the elaboration and patterning of anterior neural gene expression in vertebrates, possibly via effects on the retinoic acid signaling pathways.