Neural crest (NC) cells arise at the dorsal neural tube and give rise to a wide variety of cell types, including parts of the head and the peripheral nervous system. Although NC induction has been proposed to be a multi-step process, and the signals involved in this induction, including Wnt and BMP,have been identified, the spatiotemporal relationships between these factors have remained unclear. Now, on p. 771, Roberto Mayor and colleagues propose a novel two-step model for NC induction. By fate-mapping this tissue in gastrulating Xenopus embryos, the authors show that first, signals from a region of the prospective mesoderm, the dorsolateral marginal zone (DLMZ), induce the NC during gastrulation. In a second step, signals from the intermediate mesoderm, which derives from the DLMZ, maintain NC identity during neurulation. The authors further demonstrate that the first step requires Wnt activation and BMP inhibition, whereas the second requires the activation of both pathways, thus resolving long-standing controversies regarding the roles of these two pathways in NC induction.