The Xenopus cerberus gene encodes a secreted factor that is expressed in the anterior endomesoderm of gastrula stage embryos and can induce the formation of ectopic heads when its mRNA is injected into Xenopus embryos [Bouwmeester, T., Kim, S., Lu, B. & De Robertis, E. M. (1996) Nature (London) 382, 595-601]. Here we describe the existence of a cerberus-related gene, Cerr1, in the mouse. Cerr1 encodes a putative secreted protein that is 48% identical to cerberus over a 110-amino acid region. Analysis of a mouse interspecific backcross panel demonstrated that Cerr1 mapped to the central portion of mouse chromosome 4. In early gastrula stage mouse embryos, Cerr1 is expressed in the anterior visceral endoderm and in the anterior definitive endoderm. In somite stage embryos, Cerr1 expression is restricted to the most recently formed somites and in the anterior presomitic mesoderm. Germ layer explant recombination assays demonstrated that Cerr1-expressing somitic-presomitic mesoderm, but not older Cerr1-nonexpressing somitic mesoderm, was able to mimic the anterior neuralizing ability of anterior mesendoderm and maintain Otx2 expression in competent ectoderm. In most Lim1-/- headless embryos, Cerr1 expression in the anterior endoderm was weak or absent. These results suggest that Cerr1 may play a role in anterior neural induction and somite formation during mouse development.