The twisted gastrulation gene (tsg) encodes a secreted protein required for the correct specification of dorsal midline cell fate during gastrulation in Drosophila. We report that tsg homologs from human, mouse, zebrafish, and Xenopus share 72-98% identity at the amino acid level and retain all 24 cysteine residues from Drosophila. In contrast to Drosophila where tsg expression is limited to early embryos, expression is found throughout mouse and human development. In Drosophila, tsg acts in synergy with decapentaplegic (dpp), a member of the TGF-beta family of secreted proteins. The vertebrate orthologs of dpp, BMP-2 and -4, are crucial for gastrulation and neural induction, and aberrant signaling by BMPs and other TGF-beta family members results in developmental defects including holoprosencephaly (HPE). Interestingly, human TSG maps to the HPE4 locus on Chromosome 18p11.3, and our analysis places the gene within 5 Mbp of TG-interacting factor (TGIF).