The endoderm gives rise to the gut and tissues that develop as outgrowths of the gut tube, including the lungs, liver and pancreas. Here we show that GATA5, a zinc-finger transcription factor, is expressed in the yolk-rich vegetal cells of Xenopus embryos from the early gastrula stage onwards, when these cells become committed to form endoderm. At mid-gastrula stages, GATA5 is restricted to the sub-blastoporal endoderm and is the first molecular marker for this subset of endodermal cells so far identified. We show that GATA4 and GATA5 are potent inducers of endodermal marker genes in animal cap assays, while other GATA factors induce these genes only weakly, if at all. When injected into the dorsal marginal zone, GATA5 respecifies prospective mesoderm towards an endodermal fate, thereby disrupting the convergence and extension movements normally undergone by the dorsal mesoderm. The resulting phenotype is very similar to those seen after injection of dominant negative versions of the FGF-receptor or the T-box transcription factor, Xbra and can be rescued by eFGF. The ability of GATA5 to respecify ectodermal and mesodermal cells towards endoderm suggests an important role for GATA5 in the formation of this germlayer. In animal cap assays, GATA5 is induced by concentrations of activin above those known to induce dorsal mesoderm and heart, in an FGF-independent manner. These data indicate that the emerging view for endodermal induction in general, namely that it is specified by high levels of TGF-β; in the absence of FGF signalling, is specifically true for sub-blastoporal endoderm.