Neural induction in vertebrate embryos has been mainly studied in multicellular systems composed of pieces excised from ectoderm and mesoderm of amphibian embryos. A simple model system for neural induction has been established from the cleavage-arrested 8-cell ascidian embryo by pairing a single ectodermal with a single vegetal blastomere, as a competent and a inducer cell, respectively. This induction, mediated by specific cell contact, can be mimicked by treating with serine protease. In this simple model system, the turnover of subtypes of Na+ channels occurs, dependent on new transcriptional activities after neural induction. A cloned ascidian Na+ channel gene, TuNa I, is especially useful for analysis of the neural induction on the gene regulation level, and can serve as a specific marker for neuronal differentiation in the ascidian tadpole larva. In contrast to Na+ channels, transcription of inward rectifier K+ channels is suppressed immediately after neural induction. Since the inward rectifier is one of several genes expressed early in epidermal cells, we conclude that the inductive signal not only enhances the transcription of neural characters, but also suppresses that of non-neural characters.