The ability of one group of cells to influence the fate of another through cell signaling is a fundamental feature of embryonic development. One means by which such intercellular communication is carried out is through the use of secreted proteins. This proposal focuses on the Transforming Growth Factor-B (TGF-Beta) superfamily of ligands that mediate cell-cell communication in multicellular animals from Hydra to humans. Based on structural and functional conservation TGF-B-related growth factors can be divided into the prototypical TGF-Bs, the Activins, and the Bone Morphogenetic Proteins (BMPs). TGF-B ligands regulate a variety of cellular processes such as the immune response, cell proliferation (tumor suppression), hematopoiesis, vasculogenesis and wound healing, reflecting their multifunctional nature. The Activin subfamily of ligands have distinct and welt-characterized roles in the control of endocrine activity and in mesoderm induction during early development in Xenopus. The BMPs were identified by their ability to induce bone in vitro and in vivo, but are also known to be critical for organizing the body axis and in specification of cell fates in systems as diverse as flies, frogs, mice and humans. The research outlined in this proposal has two long-term objectives. One goal is to determine how BMP signaling can be modulated through interactions with extracellular proteins that antagonize and/or potentiate ligand activity. We will study this problem by examining how the secreted factors Short gastrulation and Twisted gastrulation affect the activity of the BMP ligands Screw and Decapentaplegic in embryogenesis. A second focus is to understand how signaling specificity is achieved when several ligands act through a limited number of receptors and downstream components. We will approach this issue by investigating the phenotype and delineating the receptor specificity and signaling pathway utilized by a novel TGF-B related ligand Alp that we have recently characterized.