1. Embryonic Induction
Induction is the process by which one group of cells produces a signal that determines the fate of a second group of cells. This implies both the capacity to produce a signal by the inducing cells and the competence of the responding cells to receive and interpret the signal via a signal transduction pathway. Amphibians are the most extensively studied vertebrates for investigations into embryonic induction. There are two major inductive events during early toad development:
mesoderm induction.
neural induction.

2. Mesoderm Induction:
Mesoderm induction occurs over an extended period of time in the equatorial region of the embryo from about the 32-cell stage to the beginning of gastrulation. The requirement of induction for production of mesoderm is evident by comparing the embryonic fate map (which shows the fates of regions of the embryo during normal development) to the specification map (which shows what tissue explants can do in isolation) during cleavage stages.
The fate map shows that about half of the mesoderm arises from cells above the equatorial pigment boundary, whereas no cells from above the pigment boundary will form muscle or notochord in isolation. The vegetal cells are not equal in their inductive capacities. The dorsal vegetal cells induce axial mesoderm of the dorsal midline (notochord and segmented muscle), whereas the remaining vegetal cells induce ventrolateral mesoderm (mesothelium, mesenchyme, blood cells).
These observations have led to the proposal that there are two mesoderm-inducing signals:
A general vegetal signal that operates around the circumference and induces ventral mesoderm.
A dorsal vegetal signal that induces the axial mesoderm (i.e., Spemann's organizer).
The general vegetal signal apparently remains operational in ventralized embryos produced by UV irradiation of fertilized eggs; these radially symmetrical embryos have the normal amount of mesoderm, but all of it is ventral in character. The dorsal vegetal signal is dependent upon dorsalization factors.

3. Spemann's Organizer substance:
Neural Induction :
Spemann's Organizer substance:
The developmental significance of the dorsal lip of the blastopore, which is derived from the gray crescent, was initially demonstrated by Spemann and Mangold. The dorsal lip material transplanted to the ventral side of a host gastrula would induce a secondary embryo. The transplanted dorsal lips induced the overlying host ectoderm to develop as neural tissue through vertical signaling.
Spemann-Mangold experiment :
Regional determination by the chordamesoderm
Planar (lateral) vs. vertical signaling
The involuting dorso-anterior mesoderm induces the adjacent mesoderm to form anterior neural tissue. As the mesoderm migrates toward the former animal pole, it induce to form anterior neural tissue. With the advancement of involution , ectoderm is induces the formation of posterior neural elements. According to this model, the anteroposterior character of the neural ectoderm is dependent. Interestingly, when BMP-4 signaling is blocked in animal caps, neural tissue is formed in the absence of neural inducers.

4. BMP-4 is expressed throughout the gastrula of Xenopus, except for the dorsal lip and animal cap regions. Both the mesoderm and ectoderm are patterned by antagonizing signals, with BMP-4 acting to ventralize them. If the effects of BMP-4 are counteracted, the mesoderm develops dorsal properties, and the ectoderm becomes neural tissue.
At this point, three secreted factors have been identified as likely neural inducers:
Noggin : Secreted factors that can dorsalize the mesoderm.
Chordin : Secreted factors that can dorsalize the mesoderm.
Follistatin: Is an activin antogonist that can also dorsalize mesoderm when injected as mRNA.