In C. elegans, the Sma/Mab TGFbeta signaling pathway regulates body size and male tail patterning. SMA-9, the C. elegans homolog of Schnurri, has been shown to function as a downstream component to mediate the Sma/Mab TGFbeta signaling pathway in these processes. We have discovered a new role for SMA-9 in dorsoventral patterning of the C. elegans post-embryonic mesoderm, the M lineage. In addition to a small body size, sma-9 mutant animals exhibit a dorsal-to-ventral fate transformation within the M lineage. This M lineage defect of sma-9 mutants is unique in that animals carrying mutations in all other known components of the TGFbeta pathway exhibit no M lineage defects. Surprisingly, mutations in the core components of the Sma/Mab TGFbeta signaling pathway suppressed the M lineage defects of sma-9 mutants without suppressing their body size defects. We show that this suppression specifically happens within the M lineage. Our studies have uncovered an unexpected role of SMA-9 in antagonizing the TGFbeta signaling pathway during mesodermal patterning, suggesting a novel mode of function for the SMA-9/Schnurri family of proteins.