Cultures of Xenopus blastula animal caps were used to explore the haematopoietic effects of three candidate inducers of mesoderm: basic fibroblast growth factor (bFGF), bone morphogenetic proteins (BMPs) and activin A. In response to either bFGF or activin A, explants expanded into egg-shaped structures, and beneath an outer layer of epidermis, a ventral mesodermal lining surrounded a fluid-filled cavity containing "blood-like cells". Immunocytochemistry identified some of these cells as early leukocytes, but erythrocytes were rare. BMP-2 or BMP-4 induced primitive erythrocytes as well as leukocytes, and a high concentration was required for these cells to differentiate in only a small proportion of explants. BMP-2 but not BMP-4 induced ventral mesoderm concomitantly. High concentrations of activin A dorsalized explants, which contained infrequent leukocytes, and an optimal combination of activin A and bFGF caused differentiation of muscle with few blood cells. By contrast, BMP-2 or BMP-4 plus activin A synergistically increased the numbers of both leukocytes and erythrocytes. Explants treated with BMPs plus activin contained a well organized cell mass in which yolk-rich cells mixed with blood cells and pigmented cells did not. BMP-2 plus bFGF also induced numerous leukocytes and fewer erythrocytes, but BMP-4 antagonized the leukopoietic effect of bFGF. The data suggest that the signalling pathways these three factors use to induce leukopoiesis overlap and that erythropoiesis may be activated when inducers are present in combination.