We have previously shown that mitogen-activated protein (MAP) kinase activity is required for neural specification in Xenopus. In mammalian cells, the BMP-4 effector Smad1 is inhibited by phosphorylation at MAP kinase sites (Kretzschmar et al., 1997). To test the hypothesis that MAP kinase inhibits the BMP-4/Smad1 pathway during early Xenopus development, we have generated a Smad1 mutant lacking the MAP kinase phosphorylation sites (M4A-Smad1) and compared the effects of wild-type (WT)- and M4A-Smad1 on axial pattern and neural specification in Xenopus embryos. Although overexpression of either WT- or M4A-Smad1 produced ventralized embryos, at each mRNA concentration, M4A-Smad1 had a greater ventralizing effect than WT-Smad1. Interestingly, overexpression of either form of Smad1 in ventral blastomeres disrupted posterior pattern and morphogenesis; again, more severe defects were produced by expression of M4A-Smad1 than by equal amounts of WT-Smad1. Ectodermal expression of M4A-Smad1 disrupted expression of the anterior neural gene otx2 in vivo and inhibited neural specification in response to endogenous signals in mesoderm-ectoderm recombinates. In contrast, overexpression of WT-Smad1 at identical levels had little effect on either neural specification or otx2 expression. Comparisons of protein levels following overexpression of either WT- or M4A-Smad1 indicate that WT-Smad1 may be slightly more stable than M4A-Smad1; thus, differences in stability cannot account for the increased effectiveness of M4A-Smad1. Our results demonstrate that mutations disrupting the MAPK phosphorylation sites act collectively as a gain-of-function mutation in Smad1 and that inhibitory phosphorylation of Smad1 may be a significant mechanism for the regulation of BMP-4/Smad1 signals during Xenopus development.