Early development of animal embryos involves establishing axial polarities that specify the anlage of major tissues in a 3-dimensional pattern. Cell fates are specified on this coordinate system through a combination of differential inheritance of maternal regulatory molecules and signaling interactions among cells. Correct patterning of cell fates along the primary axis of the sea urchin embryo depends on tightly regulating the ratio of activities of two nuclear regulatory proteins, SoxB1 and nuclear β–catenin. The latter acts at the top of the gene regulatory network that specifies mesoderm and endoderm and activates, directly or indirectly, signaling by Delta, Wnt8 and Nodal. In contrast, SoxB1 initially accumulates in all nuclei but is progressively eliminated from presumptive mesoderm and endoderm by β-catenin-dependent transcriptional repression and by localized protein turnover, a novel pathway acting downstream of canonical Wnt signaling. A precise temporal program for SoxB1 down regulation is crucial for endomesoderm development because SoxB1 interferes with β–catenin's transcriptional regulatory function. The mechanisms we are beginning to understand that govern the β–catenin-SoxB1 antagonism in sea urchin embryos are likely to have broad significance, since Sox factors are involved in regulating many developmental processes in many deuterostome embryos.