In vertebrates and invertebrates, the bone morphogenetic protein (BMP) signaling pathway patterns cell fates along the dorsoventral (DV) axis. In vertebrates, BMP signaling specifies ventral cell fates, whereas restriction of BMP signaling by extracellular antagonists allows specification of dorsal fates. In misexpression assays, the conserved extracellular factor Twisted gastrulation (Tsg) is reported to both promote and antagonize BMP signaling in DV patterning. To investigate the role of endogenous Tsg in early DV patterning, we performed morpholino (MO)-based knockdown studies of Tsg1 in zebrafish. We found that loss of tsg1 results in a moderately strong dorsalization of the embryonic axis, suggesting that Tsg1 promotes ventral fates. Knockdown of tsg1 combined with loss of function of the BMP agonist tolloid (mini fin) or heterozygosity for the ligand bmp2b (swirl) enhanced dorsalization, supporting a role for Tsg1 in specifying ventral cell fates as a BMP signaling agonist. Moreover, loss of tsg1 partially suppressed the ventralized phenotypes of mutants of the BMP antagonists Chordin or Sizzled (Ogon). Our results support a model in which zebrafish Tsg1 promotes BMP signaling, and thus ventral cell fates, during DV axial patterning.