Maternal beta-catenin and Nodal signals are essential for the formation of the dorsal organizer, which, in turn, induces neural and other dorsal tissue development in vertebrate embryos. Tob (Transducer of ErbB2) proteins possess antiproliferative properties and are known to influence BMP signaling, but their relationship to other signaling pathways and to embryonic patterning in general was unclear. In this study, we demonstrate that zebrafish tob1a is required for correct dorsoventral patterning. Mechanistically, Tob1a inhibits beta-catenin transcriptional activity by physically associating with beta-catenin and preventing the formation of beta-catenin/LEF1 complexes. Although Tob1a can also inhibit the transcriptional activity of the Nodal effector Smad3, its role in limiting dorsal development is executed primarily by antagonizing the beta-catenin signal. We further demonstrate that Tob family members across species share similar biochemical properties and biological activities.