The zinc finger/homeo-domain transcription factor (zfh x 1) family in vertebrates consists of two members, deltaEF1 and SIP1. They have been proposed to display antagonistic activities in the interpretation of Smad-dependent TGFbeta signaling during mesoderm formation. We cloned Xenopus deltaEF1 cDNA, analyzed the expression profile of the gene, and compared the inducing and interacting properties of the protein to that of XSIP1. Whereas XSIP1 RNA is selectively expressed in the early developing nervous system, we show that XdeltaEF1 gene transcription is only activated during neurulation and that its expression is restricted to the paraxial mesoderm. From early tail bud stage, XdeltaEF1 and XSIP1 are coexpressed in migratory cranial neural crest, in the retina, and in the neural tube. Overproduction of XdeltaEF1 in RNA-injected embryos, like that of XSIP1, reduced the expression of BMP-dependent genes but only XSIP1 has the ability to induce neural markers. We find that XdeltaEF1 and XSIP1 can both form complexes, although with different efficiency, with Smad3, with the coactivators p300 and pCAF, and with the corepressor CtBP1. Together, these results indicate that deltaEF1 and SIP1 do not function as antagonists during Xenopus early embryogenesis but do display different repression efficiencies and interaction properties.