Regulation of the stability of β catenin protein is a critical role of Wnt signaling cascades. In early Xenopus development, dorsal axis specification depends on regulation of β catenin by both cytoplasmic and nuclear mechanisms. While the cytoplasmic protein axin is known as a key component of the cytoplasmic β catenin degradation complex, loss-of-function studies are needed to establish whether it is required for dorso-ventral patterning in the embryo, and to test where in the embryo it carries out its function. Here, we show that embryos lacking maternal axin protein have increased levels of soluble β catenin protein and increased nuclear localization of β catenin in ventral nuclei at the blastula stage. These embryos gastrulate abnormally and develop with excessive notochord and head structures, and reduced tail and ventral components. They show increased expression of dorsal markers, including siamois, Xnr3, chordin, gsc, Xhex, and Otx2, decreased expression of Xwnt 8 and Xbra, and little alteration of BMP4 and Xvent1 and -2 mRNA levels. The ventral halves of axin-depleted embryos at the gastrula stage have dramatically increased levels of chordin expression, and severely decreased levels of Xwnt 8 mRNA expression, while BMP4 transcript levels are only slightly reduced. This dorso-anterior phenotype is rescued by axin mRNA injected into the vegetal pole of axin-depleted oocytes before fertilization. Interestingly, the phenotype was rescued by ventral but not dorsal injection of axin mRNA, at the 4-cell stage, although dorsal injection into wild-type embryos does cause ventralization. These results show directly that the localized ventral activity of maternal axin is critical for the correct patterning of the early Xenopus embryo.