It has been known for several years that the fibroblast growth factors (FGFs) have potent mesoderm-inducing activity. As a result they have been considered good candidates for one of the endogenous vegetally localized mesoderm-inducing signals in the amphibian Xenopus laevis. In this review the properties of the FGFs and their expression patterns in Xenopus are described. Recent work is discussed which reveals a close link between FGF signalling and regulation of the Xenopus brachyury (Xbra) gene. These data are used to build a model of FGF function which is quite different from what was originally conceived. Present evidence supports the view that during blastula stages the FGFs do not act as vegetally localized inducing signals. Instead, they are required in the animal hemisphere as competence factors, which provide a low level stimulation of the tyrosine kinase signal transduction pathway. FGF activity is necessary for the full range of responses to the vegetal inducing signals, including the activation of Xbra transcription in the marginal zone of the late blastula. Xbra is able to activate the zygotic transcription of eFGF, which suggests that there is a period of autocatalytic activation of eFGF and Xbra transcription within the forming mesoderm of the marginal zone. FGF activity continues to be required to maintain the expression of a sub-set of mesodermal genes, including Xbra, in the blastopore region and possibly also in the notochord through gastrula and neurula stages. In addition a role for the FGFs in anteroposterior specification and development of the myogenic lineages is discussed.