The neural crest is a population of cells that originates at the interface between the neural plate and non-neural ectoderm. Here, we have analyzed the role that Notch and the homeoprotein Xiro1 play in the specification of the neural crest. We show that Xiro1, Notch and the Notch target gene Hairy2A are all expressed in the neural crest territory, whereas the Notch ligands Delta 1 and Serrate are expressed in the cells that surround the prospective crest cells. We have used inducible dominant-negative and activator constructs of both Notch signaling components and Xiro1 to analyze the role of these factors in neural crest specification without interfering with mesodermal or neural plate development. Activation of Xiro1 or Notch signaling led to an enlargement of the neural crest territory, whereas blocking their activity inhibited the expression of neural crest markers. It is known that BMPs are involved in the induction of the neural crest and, thus, we assessed whether these two elements might influence the expression of Bmp4. Activation of Xiro1 and of Notch signaling upregulated Hairy2A and inhibited Bmp4 transcription during neural crest specification. These results, in conjunction with data from rescue experiments, allow us to propose a model wherein Xiro1 lies upstream of the cascade regulating Delta 1 transcription. At the early gastrula stage, the coordinated action of Xiro1, as a positive regulator, and Snail, as a repressor, restricts the expression of Delta 1 at the border of the neural crest territory. At the late gastrula stage, Delta 1 interacts with Notch to activate Hairy2A in the region of the neural fold. Subsequently, Hairy2A acts as a repressor of Bmp4 transcription, ensuring that levels of Bmp4 optimal for the specification of the neural plate border are attained in this region. Finally, the activity of additional signals (WNTs, FGF and retinoic acid) in this newly defined domain induces the production of neural crest cells. These data also highlight the different roles played by BMP in neural crest specification in chick and Xenopus or zebrafish embryos.