In an expression screen for factors that pattern or induce ventral mesoderm, we isolated a complementary DNA encoding Mix.1, a paired class homeobox gene with no previously known function. Injection of Mix.1 messenger RNA results in extensive blood formation in the whole embryo and transforms dorsal mesoderm to a ventral fate. Mix.1 expression is induced by bone morphogenetic protein-4 (BMP-4), and a dominant inhibitory mutant of Mix.1 can restore a dorsal axis in embryos ventralized by ectopic BMP-4 expression. Mix.1 can form heterodimers with the dorsalizing gene siamois, which encodes a homeodomain protein that is structurally similar to Mix.1. Furthermore, Mix.1 blocks the duplicated axis induced by ectopic siamois expression. Our findings indicate that Mix.1 participates in a BMP-4 signalling pathway to pattern ventral mesoderm, and suggest a model whereby dimerization of homeodomain proteins regulates dorsal-ventral patterning.