We report that Vg1, a maternal mRNA localized to the vegetal hemisphere of frog eggs, encodes a member of the transforming growth factor-beta (TGF-beta) family of proteins. Furthermore, we show that Vg1 mRNA is distributed to presumptive endodermal cells after fertilization. Previous studies had shown that the vegetal end of a frog egg produces a signal that induces the overlying animal pole cells to form mesodermal tissue. More recently it has been shown that fibroblast growth factor (FGF) and TGF-beta can participate in the induction of muscle. Together, these results lead us to propose that the formation of mesoderm during frog development is specified by the products of localized maternal mRNAs, including Vg1.