A complementary DNA clone corresponding to a 4.2-kilobase transcript that is present in the Xenopus oocyte and newly transcribed in the neurula stages of development has been isolated. This messenger RNA encodes a 155-amino acid protein that is 84% identical to the human basic fibroblast growth factor (bFGF). When expressed in Escherichia coli and purified, the Xenopus FGF induced mesoderm in animal cell blastomeres as measured by muscle actin expression. Immunoblots with an antibody to a Xenopus FGF peptide show that the oocyte and early embryo contain a store of the FGF polypeptide at high enough concentrations to induce mesoderm. The presence of FGF in the oocyte, together with the apparent lack of a secretory signal sequence in the protein, suggest that the regulation of mesoderm induction may involve novel mechanisms that occur after the translation of FGF.