The blastula Chordin- and Noggin-expressing (BCNE) center located in the dorsal animal region of the Xenopus blastula embryo contains both prospective anterior neuroectoderm and Spemann organizer precursor cells. Here we show that, contrary to previous reports, the canonical Wnt target homeobox genes, Double knockdown of these genes using antisense morpholinos in Xenopus laevis blocked head formation, reduced the expression of the other BCNE center genes, upregulated Bmp4 expression, and nullified hyperdorsalization by lithium chloride. Moreover, gain- and loss-of-function experiments showed that Siamois and Twin expression is repressed by the vegetal transcription factor VegT. We propose that VegT expression causes maternal beta-Catenin signals to restrict Siamois and Twin expression to the BCNE region. A two-step inhibition of BMP signals by Siamois and Twin-- first by transcriptional repression of Bmp4 and then by activation of the expression of the BMP inhibitors Chordin and Noggin--in the BCNE center is required for head formation.