Xom (also known as Xvent-2) is a homeobox-containing gene expressed throughout the early gastrula of the Xenopus embryo with the exception of the organizer. Activation of Xom is an immediate-early response to BMP signaling, and overexpression of Xom, like overexpression of BMP family members, causes ventralization of the embryo. In this paper we first show that Xom is a transcriptional repressor and we then define its preferred DNA-binding site. Overexpression of wild-type Xom and a dominant-negative form suggests that Xom functions by repressing transcription of goosecoid, and analysis of the goosecoid promoter reveals a site which is required for Xom-mediated repression of goosecoid promoter reporter constructs. Together, these results suggest that Xom causes down-regulation of goosecoid in a direct fashion and that this accounts, at least in part, for the ability of Xom to cause ventralization of the Xenopus embryo.