Signaling molecules are essential for vertebrate embryonic development. Here, two Xenopus homologs of the Drosophila gene fringe, lunatic Fringe (IFng) and radical Fringe (rFng), were identified and the protein product of IFng further characterized. The messenger RNA of IFng is supplied as a maternal message, Its product is a precursor protein consisting of pre-, pro-, and mature regions. The mature lunatic Fringe protein is secreted extracellularly, and it induced mesodermal tissue formation in animal cap assays. These results indicate that secreted lunatic Fringe can induce mesoderm and reveal that the Fringe proteins are a family of vertebrate signaling molecules.