The transcription factor AP2 (TFAP2) has an important role in regulating gene expression in both epidermis and neural crest cells. In order to further characterize these functions we have used a hormone inducible TFAP2α fusion protein in a Xenopus animal cap assay to identify downstream targets of this factor. The most common pattern comprised genes predominantly expressed in the epidermis. A second group was expressed at high levels in the neural crest, but all of these were also expressed in the epidermis as well as in other tissues in which TFAP2α has not been detected, suggesting modular control involving both TFAP2-dependent and TFAP2-independent components. In addition, a few strongly induced genes did not overlap at all in expression pattern with that of TFAP2α in the early embryo, and were also activated precociously in the experimentally manipulated ectoderm, and thus likely represent inappropriate regulatory interactions. A final group was identified that were repressed by TFAP2α and were expressed in the neural plate. These results provide further support for the importance of TFAP2α in ectoderm development, and also highlight the molecular linkage between the epidermis and neural crest in the Xenopus embryo.