During the development of Xenopus laevis, maternal mRNAs and proteins stored in the egg direct early patterning events such as the specification of the dorsoventral axis and primary germ layers. In an expression screen to identify maternal factors important for early development, we isolated a truncated cDNA for maternal Zic2(tZic2), encoding a zinc-finger transcription factor. The predicted tZic2 protein lacked the N-terminal region, but retained the zinc-finger domain. When expressed in embryos, tZic2 inhibited head and axial development,and blocked the ability of full-length Zic2 to induce neural crest genes. Depletion of maternal Zic2 from oocytes, using antisense oligonucleotides, caused exogastrulation, anterior truncations and axial defects. We show that loss of maternal Zic2 results in persistent and increased expression of Xenopus nodal-related (Xnr) genes, except for Xnr4, and overall increased Nodal signaling. Injection of a Nodal antagonist, Cerberus-short, reduced the severity of head and axial defects in Zic2-depleted embryos. Depletion of Zic2 could not restore Xnr expression to embryos additionally depleted of VegT, a T-domain transcription factor and an activator of Xnr gene transcription. Taken together, our results suggest a role for maternal Zic2 in the suppression of Xnr genes in early development. ZIC2 is mutated in human holoprosencephaly (HPE), a severe defect in brain hemisphere separation,and these results strengthen the suggestion that increased Nodal-related activity is a cause of HPE.