Epiboly, the spreading of the blastoderm over the large yolk cell, is the first morphogenetic movement of the teleost embryo. Examining this movement as a paradigm of vertebrate morphogenesis, we have focused on the epiboly arrest mutant half baked (hab), which segregates as a recessive lethal, including alleles expressing zygotic-maternal dominant (ZMD) effects. Here we show that hab is a mutation in the zebrafish homolog of the adhesion protein E-cadherin. Whereas exclusively recessive alleles of hab produce truncated proteins, dominant alleles all contain transversions in highly conserved amino acids of the extracellular domains, suggesting these alleles produce dominant-negative effects. Antisense oligonucleotides that create specific splicing defects in the hab mRNA phenocopy the recessive phenotypes and, surprisingly, some of the ZMD phenotypes as well. In situ analyses show that during late epiboly hab is expressed in a radial gradient in the non axial epiblast, from high concentrations in the exterior layer of the epiblast to low concentrations in the interior layer of the epiblast. During epiboly, using an asymmetric variant of radial intercalation, epiblast cells from the interior layer sequentially move into the exterior layer and become restricted to that layer; there they participate in subtle cell shape changes that further expand the blastoderm. In hab mutants, when cells intercalate into the exterior layer, they tend to neither change cell shape nor become restricted, and many of these cells 'de-intercalate' and move back into the interior layer. Cell transplantation showed all these defects to be cell-autonomous. Hence, as for the expansion of the mammalian trophoblast at a similar developmental stage, hab/E-cadherin is necessary for the cell rearrangements that spread the teleost blastoderm over the yolk.