A bone morphogenetic protein (BMP) signaling pathway is implicated in dorsoventral patterning in Xenopus. Here we show that three genes in the zebrafish, swirl, snailhouse, and somitabun, function as critical components within a BMP pathway to pattern ventral regions of the embryo. The dorsalized mutant phenotypes of these genes can be rescued by overexpression of bmp4, bmp2b, an activated BMP type I receptor, and the downstream functioning Smad1 gene. Consistent with a function as a BMP ligand, swirl functions cell nonautonomously to specify ventral cell fates. Chromosomal mapping of swirl and cDNA sequence analysis demonstrate that swirl is a mutation in the zebrafish bmp2b gene. Interestingly, our analysis suggests that the previously described nonneural/neural ectodermal interaction specifying the neural crest occurs through a patterning function of swirl/bmp2b during gastrulation. We observe a loss in neural crest progenitors in swirl/bmp2b mutant embryos, while somitabun mutants display an opposite, dramatic expansion of the prospective neural crest. Examination of dorsally and ventrally restricted markers during gastrulation reveals a successive reduction and reciprocal expansion in nonneural and neural ectoderm, respectively, in snailhouse, somitabun, and swirl mutant embryos, with swirl/bmp2b mutants exhibiting almost no nonneural ectoderm. Based on the alterations in tissue-specific gene expression, we propose a model whereby swirl/bmp2b acts as a morphogen to specify different cell types along the dorsoventral axis.