Frodo is a novel conserved regulator of Wnt signaling that has been identified by its association with Dishevelled, an intracellular component of Wnt signal transduction. To understand further how Frodo functions, we have analyzed its role in neural development using specific morpholino antisense oligonucleotides. We show that Frodo and the closely related Dapper synergistically regulate head development and morphogenesis. Both genes were cell-autonomously required for neural tissue formation, as defined by the pan-neural markers sox2 and nrp1. By contrast, beta-catenin was not required for pan-neural marker expression, but was involved in the control of the anteroposterior patterning. In the mesoderm, Frodo and Dapper were essential for the expression of the organizer genes chordin, cerberus and Xnr3, but they were not necessary for the expression of siamois and goosecoid, established targets of beta-catenin signaling. Embryos depleted of either gene showed a decreased transcriptional response to TCF3-VP16, a beta-catenin-independent transcriptional activator. Whereas the C terminus of Frodo binds Dishevelled, we demonstrate that the conserved N-terminal domain associates with TCF3. Based on these observations, we propose that Frodo and Dapper link Dsh and TCF to regulate Wnt target genes in a pathway parallel to that of beta-catenin.