Epidermal differentiation in the ventral ectoderm of Xenopus embryos is regulated by the bone morphogenetic protein (BMP) pathway. However, it remains unclear how the BMP pathway is activated and induces the epidermal fate in the ventral ectoderm. Here, we identify a novel player in the BMP pathway that is required for epidermal differentiation during Xenopus early embryonic development. We show that Xenopus EIG121L (xEIG121L) protein, an evolutionarily conserved transmembrane protein, is expressed in the ventral ectoderm at the gastrula and neurula stages. Almost complete knockdown of xEIG121L protein with antisense morpholino oligonucleotides in early Xenopus embryos results in severe developmental defects, including the inhibition of epidermal differentiation and the induction of neural genes. Remarkably, our analysis shows that BMP/Smad1 signaling is severely suppressed in the xEIG121L knockdown ectoderm. Moreover, immunoprecipitation and immunostaining experiments suggest that xEIG121L protein physically interacts, and co-localizes, with BMP receptors. Thus, our results identify a novel regulator of the BMP pathway that has a positive role in BMP signaling and plays an essential role in epidermal differentiation during early embryonic development.The bone morphogenetic protein (BMP) 4 signaling pathway has key roles in embryonic development, adult homeostasis, and diseases (1-6). A secreted dimeric ligand binds to a heterotetrameric cell surface complex of two type II and two type I kinase receptors. The type II receptor phosphorylates the type I receptor and thereby activates it. The activated type I receptor phosphorylates receptor-activated Smad (Smad1, Smad5, and Smad8 in mammals) at C-terminal serines. These phosphorylated Smad proteins form heterotrimeric complexes with the common-mediator Smad (Smad4 in mammals), and these complexes accumulate in the nucleus where they participate in the transcriptional control of target genes with sequence-specific transcription factors, co-activators, and co-repressors (1-6).In Xenopus embryos, the BMP pathway determines cell fates at the gastrula stage (7,8). In the ectoderm, the ventral region, in which the BMP pathway is activated, differentiates into epidermal tissues, and the dorsal region, in which the BMP pathway is inhibited, differentiates into neural tissues. Previous studies have shown that various factors regulate the BMP pathway during early embryonic development (7, 9 -18). Secreted factors such as Chordin, Noggin, and Follistatin bind to BMPs (BMP2, BMP4, BMP7, and anti-dorsalizing morphogenetic protein) in the extracellular space and inactivate BMP signaling at the gastrula stage, thereby inducing neural differentiation in the dorsal ectoderm (9,10,12,19). In the ventral region, secreted factors Sizzled (Szl) and Crossveinless-2 (Cv2) are induced by the BMP pathway and serve as BMP feedback inhibitors (15,17). These molecules comprise a network of BMP interacting proteins to establish the dorsoventral body axis in early embryos.In epidermal differ...