Previously we have shown that blocking bone morphogenetic protein (BMP) receptor signaling by a dominant negative BMP receptor causes neurogenesis in Xenopus animal caps (ACs), whereas the physiological neural inducer noggin acts as a homodimer physically binding to BMP-4 and disrupting its signaling at the ligand level. The present study attempted to elucidate the relationship between the structure and function of noggin. By replacing some cysteine residues with serine residues through a site-directed mutagenesis strategy, we generated three noggin mutants, C145S, C205S, and C(218, 220, 222)S (3CS). Although mRNAs encoded by these mutants were translated as efficiently as wild-type (WT) noggin mRNA, they behaved differently when expressed in vivo. Expression of WT noggin or C205S in Xenopus ACs converted the explants (prospective ectoderm) into neural tissue, indicated by the neural-like morphology and expression of the pan neural marker NCAM in the ACs. In contrast, ACs expressing C145S or 3CS sustained an epidermal fate like the control caps. Similar results were observed in the mesoderm where C205S (but not C145S and 3CS) displayed dorsalizing activity as well as WT noggin. Altogether, our results suggest that Cys145 alone or Cys(218, 220, 222) as a whole in noggin protein is required for the biological activities of noggin, probably participating in the dimerization of noggin with BMP-4 or itself.