During vertebrate development the dorsal gastrula or Spemann-Mangold organizer orchestrates axis formation largely by limiting the ventralizing and posteriorizing activity of bone morphogenetic proteins (BMPs). In mouse and Xenopus laevis, genes encoding the zinc finger transcriptional repressor Prdm1/Blimp1 (PR domain containing 1, with ZNF domain; previously named B lymphocyte-induced maturation protein 1) were recently shown to be expressed in the visceral endoderm and anterior endomesoderm, respectively, and the prechordal plate of gastrula stage embryos. Later in development Prdm1/Blimp1 is expressed in many other tissues, including pharyngeal arches, limb buds, otic vesicles, photoreceptor cell layer, slow muscle and cloaca. Based on misexpression and dominant-negative studies, Prdm1/Blimp1 was proposed to promote anterior endomesoderm and head development in Xenopus laevis. Here we report the isolation and functional characterization of zebrafish prdm1 exhibiting a dynamic and evolutionarily conserved expression pattern. Misexpression of prdm1 inhibits the formation of dorsoanterior structures and reduces expression of chordin, which encodes a BMP antagonist. Conversely, interference with Prdm1 translation using antisense morpholino oligonucleotides, increases chordin expression, while reducing expression of Bmp genes, and consequently dorsalizing the embryo. At the end of the gastrula period, prdm1 morphant embryos have enlarged animal-vegetal and anteroposterior embryonic axes. This altered embryo morphology is associated with augmented extension movements of dorsal tissues and normal posterior migration of ventral tissues. Additionally, Prdm1 activity is essential for proper development of slow muscle, the photoreceptor cell layer, branchial arches and pectoral fins. Our studies reveal essential roles for prdm1 in limiting the function of the gastrula organizer and regulating cell fate specification and morphogenetic processes in precise correspondence with its intricate expression pattern.