Hydra is a classical model to study key features of embryogenesis such as axial patterning and stem cell differentiation. In contrast to other organisms where these mechanisms are active only during embryonic development, in Hydra they can be studied in adults. The underlying assumption is that the machinery governing adult patterning mimics regulatory mechanisms which are also active during early embryogenesis. Whether, however, Hydra embryogenesis is governed by the same mechanisms which are controlling adult patterning, remains to be shown. In this paper, in precisely staged Hydra embryos, we examined the expression pattern of 15 regulatory genes shown previously to play a role in adult patterning and cell differentiation. RT-PCR revealed that most of the genes examined were expressed in rather late embryonic stages. In situ hybridization, nuclear run-on experiments, and staining of nucleolar organizer region-associated proteins indicated that genes expressed in early embryos are transcribed in the engulfed "nurse cells" (endocytes). This is the first direct evidence that endocytes in Hydra not only provide nutrients to the developing oocyte but also produce maternal factors critical for embryogenesis. Our findings are an initial step towards understanding the molecular machinery controlling embryogenesis of a key group of basal metazoans and raise the possibility that in Hydra there are differences in the mechanisms controlling embryogenesis and adult patterning.