During gastrulation, diffusible "organizer" signals, including members of the TGFbeta Nodal subfamily [1], pattern dorsal mesoderm and the embryonic axes. Simultaneously, negative regulators of these signals, including the Nodal inhibitor Lefty, an atypical TGFbeta factor, are induced by Nodal [2-4]. This suggests that Lefty-dependent modulation of organizer signaling might regulate dorsal mesoderm patterning and axial morphogenesis. Here, Xenopus Lefty (XIefty) function was blocked by injection of anti-XIefty morpholino oligonucleotides [MO). Xlefty-deficient embryos underwent exogastrulation, an aberrant morphogenetic process not predicted from deregulation of the Nodal pathway alone. In the absence of Xlefty, both Nodal(Xnr2, gsc, cer, Xbra) and Wnt-responsive (gsc, Xnr3) organizer gene expression expanded away from the dorsal blastopore lip. Conversely, coexpression of Xlefty with Nodal or Wnt reduced the ectopic expression of Nodal- (Xbra) and Wnt-responsive (Xnr3) genes in a dose-dependent manner. Furthermore, Xlefty expression in the ectodermal animal pole inhibited endogenous Nodal- and Wnt-responsive gene expression in distant mesoderm cells, indicating that Xlefty inhibition can spread from its source. We hypothesize that Xlefty negatively regulates the spatial extent of Nodal- and Wnt-responsive gene expression in the organizer and that this Xlefty-dependent inhibition is essential for normal organizer patterning and gastrulation.