Signalling by members of the FGF family is required for induction and maintenance of the mesoderm during amphibian development. One of the downstream effectors of FGF is the SRF-interacting Ets family member Elk-1, which, after phosphorylation by MAP kinase, activates the expression of immediate-early genes. Here, we show that Xenopus Elk-1 is phosphorylated in response to FGF signalling in a dynamic pattern throughout the embryo. Loss of XElk-1 function causes reduced expression of Xbra at neurula stages, followed by a failure to form notochord and muscle and then the partial loss of trunk structures. One of the genes regulated by XElk-1 is XEgr-1, which encodes a zinc finger transcription factor: we show that phosphorylated XElk-1 forms a complex with XSRF that binds to the XEgr-1 promoter. Superficially, Xenopus tropicalis embryos with reduced levels of XEgr-1 resemble those lacking XElk-1, but to our surprise, levels of Xbra are elevated at late gastrula stages in such embryos, and over-expression of XEgr-1 causes the down-regulation of Xbra both in whole embryos and in animal pole regions treated with activin or FGF. In contrast, the myogenic regulatory factor XMyoD is activated by XEgr-1 in a direct manner. We discuss these counterintuitive results in terms of the genetic regulatory network to which XEgr-1 contributes.