FGF and anti-BMP signals from the Spemann organizer of mesodermal origin are essential for Xenopus neural development from gastrula ectoderm. However, the detailed cellular and molecular mechanisms of signaling, especially those underlying the neural induction process, are still controversial. We show here that the expression of early neural marker genes such as sox2 and otx2 is suppressed both in vivo and in vitro, when ectoderm cells are loaded with a dominant-negative construct of Ets transcription factors or a translation-blocking antisense FGF2 MO or FGF8 MO, respectively. This indicates that the expression of these FGF signaling molecules in ectoderm cells contributes significantly to neural induction, in contrast to the "neural default model" that has been emphasized, in which anti-BMP signaling from the organizer plays a major role in the neural induction in Xenopus. Our results indicate that cell-autonomous FGF signaling between ectoderm cells, rather than paracrine signaling from organizer cells, directly induces the expression of sox2 and otx2 via the FGF2, FGF8/MAPK/Ets pathway at very low signaling levels. This is independent of inhibiting BMP signaling via the FGF/MAPK/Smad pathway, which has been proposed as the primary pathway for FGF signaling in Xenopus neural induction. Using cultured ectoderm cells, we also obtained results suggesting that the mode of contribution of FGF signaling to neural development is altered during the subsequent neural patterning stage. As we increase the amounts of FGF in the culture medium, anterior neural genes activated at low FGF signaling levels are suppressed, and instead position-specific, more posterior neural genes are activated in a dose-dependent manner via the FGF/MAPK/Ets pathway. These results support the claim that morphogenic FGFs from the organizer diffuse in a paracrine manner through the plane of the induced neuroectoderm, causing anteroposterior patterning of neural tissue.