Disruption of axis specification leads to defects in dorsal tissue patterning and cell movements. Here, we examine how ␤-catenin coordinately affects gastrulation movements and dorsal mesoderm differentiation. The reduction of ␤-catenin protein levels by morpholino oligonucleotides complementary to ␤-catenin mRNA causes a disruption in gastrulation movements. Time-lapse imaging of ␤-catenin morphants during gastrulation reveals that involution occurs simultaneously around the blastopore in the absence of convergent extension cell movements. Transplantation experiments show that morphant cells grafted from the marginal zone into wild-type hosts differentiate into notochord and muscle. However, wild-type mesoderm cells grafted to the marginal zone of ␤-catenin morphants do not form dorsal tissues. These data argue that ␤-catenin is not required for the initial establishment of dorsal mesoderm cell competency, but it is required for the maintenance of that competency. We propose that tissue interactions that occur during convergent extension movements are necessary for maintaining dorsal tissue competency. Developmental Dynamics 236:3007-3019, 2007.