Recent advances in analyzing wnt signaling have provided evidence that frizzled proteins can function as wnt receptors. We have identified Xfz3, a Xenopus frizzled family member. The amino acid sequence is 89% identical to the product of the murine gene Mfz3, and is predicted to be a serpentine receptor with seven transmembrane domains. Xfz3 is a maternal mRNA with low levels of expression until the end of gastrulation. The expression level increases significantly from neurulation onward. Whole-mount in situ hybridization analysis shows that expression of Xfz3 is highly restricted to the central nervous system. High levels of expression are detected in the anterior neural folds. Low levels of expression are also detected in the optic and otic vesicles, as well as in the pronephros anlage. In addition, Xfz3 mRNA is concentrated in a large band in the midbrain. Overexpression of Xfz3 blocks neural tube closure, resulting in embryos with either bent and strongly reduced anteroposterior axis in a dose-dependent manner. However, it does not affect gastrulation, the expression and localization of organizer-specific genes such as goosecoid, chordin and noggin. Therefore, Xfz3 is not involved in early mesodermal patterning. Injection of RNA encoding GFP-tagged Xfz3 shows that overexpressed proteins can be detected on the cell surface until at least late neurula stage, suggesting that they can exert an effect after gastrulation. Our expression data and functional analyses suggest that the Xfz3 gene product has an antagonizing activity in the morphogenesis during Xenopus development.