A cDNA clone encoding a new member (designated GDF-1) of the transforming growth factor-beta (TGF beta) superfamily was isolated from a library prepared from day 8.5 mouse embryos. The nucleotide sequence of GDF-1 predicts a protein of 357 amino acids with a mol wt of 38,600. The sequence contains a pair of arginine residues at positions 236-237, which is likely to represent a site for proteolytic processing. The C-terminus following the presumed dibasic cleavage site shows significant homology with the known members of the TGF beta superfamily, matching the other family members at all of the invariant positions, including the seven cysteine residues with their characteristic spacing. GDF-1 is most homologous to Xenopus Vg-1 (52%), but is not likely to be the murine homolog of Vg-1. In vitro translation experiments were consistent with GDF-1 being a secreted glycoprotein. Genomic Southern analysis indicated that GDF-1 may be highly conserved across species. These results suggest that GDF-1 is most likely an extracellular factor mediating cell differentiation events during embryonic development.