The SRY-related, HMG box SoxB1 transcription factors are highly homologous, evolutionarily conserved proteins that are expressed in neuroepithelial cells throughout neural development. SoxB1 genes are down-regulated as cells exit the cell-cycle to differentiate and are considered functionally redundant in maintaining neural precursor populations. However, little is known about Sox3 function and its mode of action during primary neurogenesis. Using gain and loss-of-function studies, we analyzed Sox3 function in detail in Xenopus early neural development and compared it to that of Sox2. Through these studies we identified the first targets of a SoxB1 protein during primary neurogenesis. Sox3 functions as an activator to induce expression of the early neural genes, sox2 and geminin in the absence of protein synthesis and to indirectly inhibit the Bmp target Xvent2. As a result, Sox3 increases cell proliferation, delays neurogenesis and inhibits epidermal and neural crest formation to expand the neural plate. Our studies indicate that Sox3 and 2 have many similar functions in this process including the ability to activate expression of geminin in naïve ectodermal explants. However, there are some differences; Sox3 activates the expression of sox2, while Sox2 does not activate expression of sox3 and sox3 is uniquely expressed throughout the ectoderm prior to neural induction suggesting a role in neural competence. With morpholino-mediated knockdown of Sox3, we demonstrate that it is required for induction of neural tissue by BMP inhibition. Together these data indicate that Sox3 has multiple roles in early neural development including as a factor required for nogginmediated neural induction.