T-box family transcription factors play many roles in Metazoan development. Here we characterise Tbx6r, a unique Tbx6 paralogue isolated from the amphibian Xenopus. The evolution and developmental integration of this divergent T-box gene within the vertebrates reveals an unexpected level of plasticity within this conserved family of developmental regulators. We show that despite their co-expression, Tbx6 and Tbx6r have dissimilar transcriptional responses to ligand treatment, and their ability to activate ligand expression is also very different. The two paralogues have distinct inductive properties: Tbx6 induces mesoderm whereas Tbx6r induces anterior neural markers. We use hybrid proteins in an effort to understand this difference, and implicate the C-terminal regions of the proteins in their inductive specificities. Through loss-of-function analyses using antisense morpholino oligonucleotides we show that both Tbx6 paralogues perform essential functions in the development of the paraxial and intermediate mesoderm and the neural crest in Xenopus. We demonstrate that Tbx6 and Tbx6r both induce FGF8 expression as well as that of pre-placodal markers, and that Tbx6 can also induce neural crest markers via a ligand-dependent mechanism involving FGF8 and Wnt8. Our data thus identify an important new function for this key developmental regulator.