Basic helix-loop-helix (bHLH) proteins are instrumental in determining cell type during development. A bHLH protein, termed NeuroD, for neurogenic differentiation, has now been identified as a differentiation factor for neurogenesis because (i) it is expressed transiently in a subset of neurons in the central and peripheral nervous systems at the time of their terminal differentiation into mature neurons and (ii) ectopic expression of neuroD in Xenopus embryos causes premature differentiation of neuronal precursors. Furthermore, neuroD can convert presumptive epidermal cells into neurons and also act as a neuronal determination gene. However, unlike another previously identified proneural gene (XASH-3), neuroD seems competent to bypass the normal inhibitory influences that usually prevent neurogenesis in ventral and lateral ectoderm and is capable of converting most of the embryonic ectoderm into neurons. The data suggest that neuroD may participate in the terminal differentiation step during vertebrate neuronal development.