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Bone Morphogenetic Proteins (BMPs) are potent regulators of embryonic cell fate that are presumed to initiate signal transduction in recipient cells through multimeric, transmembrane, serine/threonine kinase complexes made up of type I and type II receptors. BMPRII was identified previously in mammals as the only type II receptor that binds BMPs, but not activin or TGFbeta, in vitro. We report the cloning and functional analysis in vivo of its Xenopus homolog, XBMPRII. XBMPRII is expressed maternally and zygotically in an initially unrestricted manner. Strikingly, XBMPRII transcripts then become restricted to the mesodermal precursors during gastrulation. Expression is lower in the dorsal organizer region, potentially providing a mechanism to suppress the actions of BMP4 on dorsally fated tissues. Similar to the results seen for a truncated type I BMP receptor (tBR), a dominant-negative form of XBMPRII (tBRII) can dorsalize ventral mesoderm, induce extensive secondary body axes, block mesoderm induction by BMP4 and directly neuralize ectoderm, strongly suggesting that XBMPRII mediates BMP signals in vivo. However, although both tBRII and tBR can induce partial secondary axes, marker analysis shows that tBRII-induced axes are more anteriorly extended. Additionally, coinjection of tBRII and tBR synergistically increases the incidence of secondary axis formation. A truncated activin type II receptor (deltaXAR1) is known to block both activin and BMP signaling in vivo. Here we show that such crossreactivity does not occur for tBRII, in that it does not affect activin signaling. Furthermore, our studies indicate that the full-length activin type II receptor (XAR1) overcomes a block in BMP4 signaling imposed by tBRII, implicating XAR1 as a common component of BMP and activin signaling pathways in vivo. These data implicate XBMPRII as a type II receptor with high selectivity for BMP signaling, and therefore as a critical mediator of the effects of BMPs as mesodermal patterning agents and suppressors of neural fate during embryogenesis.