Bone morphogenetic protein (BMP) signaling plays a major role in dorsoventral patterning in vertebrates and in Drosophila. Remarkably, in Tribolium, a beetle with an ancestral type of insect development, early BMP/dpp exhibits differential expression along the anteroposterior axis. However, the BMP/Dpp inhibitor Sog/chordin is expressed ventrally and establishes a dorsal domain of BMP/Dpp activity by transporting BMPs toward the dorsal side, like in Drosophila. Loss of Tribolium Sog not only abolishes dorsoventral polarity in the ectoderm, but also leads to the complete absence of the CNS. This phenotype suggests that sog is the main BMP antagonist in Tribolium, in contrast to vertebrates and Drosophila, which possess redundant antagonists. Surprisingly, Sog also is required for head formation in Tribolium, as are the BMP antagonists in vertebrates. Thus, in Tribolium, the system of BMP and its antagonists is less complex than in Drosophila or vertebrates and combines features from both, suggesting that it might represent an ancestral state.