Bone morphogenetic protein (BMP) inhibition has been proposed as the primary determinant of neural cell fate in the developing Xenopus ectoderm. The evidence supporting this hypothesis comes from experiments in explanted "animal cap" ectoderm and in intact embryos using BMP antagonists that are unregulated and active well before gastrulation. While informative, these experiments cannot answer questions regarding the timing of signals and the behavior of cells in the more complex environment of the embryo. To examine the effects of BMP antagonism at defined times in intact embryos, we have generated a novel, two-component system for conditional BMP inhibition. We find that while blocking BMP signals induces ectopic neural tissue both in animal caps and in vivo, in intact embryos, it can only do so prior to late blastula stage (stage 9), well before the onset of gastrulation. Later inhibition does not induce neural identity, but does induce ectopic neural crest, suggesting that BMP antagonists play temporally distinct roles in establishing neural and neural crest identity. By combining BMP inhibition with fibroblast growth factor (FGF) activation, the neural inductive response in whole embryos is greatly enhanced and is no longer limited to pre-gastrula ectoderm. Thus, BMP inhibition during gastrulation is insufficient for neural induction in intact embryos, arguing against a BMP gradient as the sole determinant of ectodermal cell fate in the frog.