The normal expression pattern of the Wnt responsive homeobox gene Siamois is restricted to the dorso-vegetal region of the Xenopus embryo. Because the Wnt signaling pathway (via β-catenin) is active on the entire dorsal side of the early embryo, we have asked why Siamois expression is not seen in the dorsal ectoderm. Only Wnt signaling, via activation of β-catenin, can induce directly Siamois, and signaling via the SMAD1 (BMP2/4) or SMAD2 (activin/Vg-1) pathways cannot. We now directly show that the SMAD2 pathway can cooperate with the Wnt pathway to induce expression of Siamois much more strongly than the Wnt pathway alone, in normal embryos. We demonstrate the significance of this cooperation in normal embryos by blocking the SMAD2 signaling pathway with a dominant negative activin receptor. The activin dominant negative receptor blocks this cooperative effect and reduces the expression of Siamois by threefold in early embryos. Furthermore, we find that this cooperative relationship between the SMAD2 and Wnt pathways is reciprocal. Thus, in normal embryos, the Wnt pathway can enhance induction, by the SMAD 2 pathway, of the organizer genes Gsc and Chd but not the pan-mesodermal marker genes Xbra and Eomes. We conclude that the Wnt and SMAD2 signaling pathways cooperate to induce the expression of Spemann-organizer specific genes and so help to localize their spatial expression.