Xenopus early response gene 1 is a maternally-derived immediate-early gene whose expression is activated by FGF during mesoderm induction in Xenopus embryos. The purpose of this project was to characterize the expression and investigate the function of ER1 protein during early development in Xenopus. Analysis of the expression pattern of ER1 showed that the protein is present in the early embryo but retained in the cytoplasm until mid-blastula stages after which it is translocated to the nucleus, first in the presumptive mesoderm, then in the presumptive ectoderm, and finally in the endoderm. Overexpression of the dominant negative FGF receptor XFD completely blocks translocation of ER1 to the nucleus at mid-blastula suggesting that nuclear translocation of ER1 is dependent on events triggered by FGF signaling. Deletion analysis of stretches of acidic amino acid in the N-terminal region of ER1 showed that the protein has transactivation activity in vitro, suggesting that the protein may function as a transcription factor in vivo. Overexpression of ER1 in embryos results in embryos with posterior truncations, a phenotype similar to that of embryos overexpressing XFD. RT-PCR analysis of molecular markers expressed during early development showed that overexpression of ER1 downregulates the expression of Xbra, BMP-4, and HoxB9. These results suggest that ER1 may function as an endogenous, negative regulator of the FGF signaling pathway during Xenopus embryogenesis.