Classical embryological experiments suggest that a posterior signal is required for patterning the developing anteroposterior axis. In this paper, we investigate a potential role for FGF signalling in this process. During normal development, embryonic fibroblast growth factor (eFGF) is expressed in the posterior of the Xenopus embryo. We have previously shown that overexpression of eFGF from the start of gastrulation results in a posteriorised phenotype of reduced head and enlarged proctodaeum. We have now determined the molecular basis of this phenotype and we propose a role for eFGF in normal anteroposterior patterning. In this study, we show that the overexpression of eFGF causes the up-regulation of a number of posteriorly expressed genes, and prominent among these are Xcad3, a caudal homologue, and the Hox genes, in particular HoxA7. There is both an increase of expression within the normal domains and an extension of expression towards the anterior. Application of eFGF-loaded beads to specific regions of gastrulae reveals that anterior truncations arise from an effect on the developing dorsal axis. Similar anterior truncations are caused by the dorsal overexpression of Xcad3 or HoxA7. This suggests that this aspect of the eFGF overexpression phenotype is caused by the ectopic activation of posterior genes in anterior regions. Further results using the dominant negative FGF receptor show that the normal expression of posterior Hox genes is dependent on FGF signalling and that this regulation is likely mediated by the activation of Xcad3. The biological activity of eFGF, together with its expression in the posterior of the embryo, make it a good candidate to fulfil the role of the 'transforming' activity proposed by Nieuwkoop in his 'activation and transformation' model for neural patterning.