The formation and patterning of mesoderm during mammalian gastrulation require the activity of Nodal, a secreted mesoderm-inducing factor of the transforming growth factor-beta (TGF-beta) family. Here we show that the transcriptional corepressor DRAP1 has a very specific role in regulation of Nodal activity during mouse embryogenesis. We find that loss of Drap1 leads to severe gastrulation defects that are consistent with increased expression of Nodal and can be partially suppressed by Nodal heterozygosity. Biochemical studies indicate that DRAP1 interacts with and inhibits DNA binding by the winged-helix transcription factor FoxH1 (FAST), a critical component of a positive feedback loop for Nodal activity. We propose that DRAP1 limits the spread of a morphogenetic signal by down-modulating the response to the Nodal autoregulatory loop.