In mammalian embryonic stem cells, the acquisition of pluripotency is dependent 
on Nanog, but the in vivo analysis of Nanog has been hampered by its requirement 
for early mouse development. In an effort to examine the role of Nanog in vivo, 
we identified a zebrafish Nanog ortholog and found that its knockdown impaired 
endoderm formation. Genome-wide transcription analysis revealed that nanog-like 
morphants fail to develop the extraembryonic yolk syncytial layer (YSL), which 
produces Nodal, required for endoderm induction. We examined the genes that were 
regulated by Nanog-like and identified the homeobox gene mxtx2, which is both 
necessary and sufficient for YSL induction. Chromatin immunoprecipitation assays 
and genetic studies indicated that Nanog-like directly activates mxtx2, which, 
in turn, specifies the YSL lineage by directly activating YSL genes. Our study 
identifies a Nanog-like-Mxtx2-Nodal pathway and establishes a role for 
Nanog-like in regulating the formation of the extraembryonic tissue required for 
endoderm induction.