We show here that a secreted EGF-Discoidin-domain protein, Xenopus Del1 (xDel1), is an essential factor for dorsal development in the early Xenopus embryo. Knockdown of the xDel1 function causes obvious ventralization of the embryo. Conversely, overexpression of xDel1 expands dorsal-marker expression and suppresses ventral-marker expression in the gastrula embryo. Forced expression of xDel1 dorsalizes ventral marginal zone explants, whereas it weakly induces neural differentiation but not mesodermal differentiation in animal caps. The dorsalizing activity of xDel1 is dependent on the Discoidin domains and not on the RGD motif (which is implicated in its angiogenic activity) or EGF repeats. Luciferase assays show that xDel1 attenuates BMP-signaling reporter activity by interfering with the pathway downstream of the BMP receptor. Thus, xDel1 functions as a unique extracellular regulatory factor of DV patterning in early vertebrate embryogenesis.