Hydra, a member of phylum Cnidaria that arose early in evolution, is endowed with a defined axis, organized nervous system, and active behavior. It is a powerful model system for the elucidation of evolution of developmental mechanisms in animals. Here, we describe the identification and cloning of noggin-like gene from hydra. Noggin is a secreted protein involved at multiple stages of vertebrate embryonic development including neural induction and is known to exert its effects by inhibiting the bone morphogenetic protein (BMP)-signaling pathway. Sequence analysis revealed that hydra Noggin shows considerable similarity with its orthologs at the amino acid level. When microinjected in the early Xenopus embryos, hydra noggin mRNA induced a secondary axis in 100% of the injected embryos, demonstrating functional conservation of hydra noggin in vertebrates. This was further confirmed by the partial rescue of Xenopus embryos by hydra noggin mRNA from UV-induced ventralization. By using animal cap assay in Xenopus embryos, we demonstrate that these effects of hydra noggin in Xenopus embryos are because of inhibition of BMP signaling by Noggin. Our data indicate that BMP/Noggin antagonism predates the bilaterian divergence and is conserved during the evolution.