BACKGROUND: Cell movements are essential to the determination of cell fates during development. The zinc-finger transcription factor, Churchill (ChCh) has been proposed to regulate cell fate by regulating cell movements during gastrulation in the chick. However, the mechanism of action of ChCh is not understood. RESULTS: We demonstrate that ChCh acts to repress the response to Nodal-related signals in zebrafish. When ChCh function is abrogated the expression of mesodermal markers is enhanced while ectodermal markers are expressed at decreased levels. In cell transplant assays, we observed that ChCh-deficient cells are more motile than wild-type cells. When placed in wild-type hosts, ChCh-deficient cells often leave the epiblast, migrate to the germ ring and are later found in mesodermal structures. We demonstrate that both movement of ChCh-compromised cells to the germ ring and acquisition of mesodermal character depend on the ability of the donor cells to respond to Nodal signals. Blocking Nodal signaling in the donor cells at the levels of Oep, Alk receptors or Fast1 inhibited migration to the germ ring and mesodermal fate change in the donor cells. We also detect additional unusual movements of transplanted ChCh-deficient cells which suggests that movement and acquisition of mesodermal character can be uncoupled. Finally, we demonstrate that ChCh is required to limit the transcriptional response to Nodal. CONCLUSIONS: These data establish a broad role for ChCh in regulating both cell movement and Nodal signaling during early zebrafish development. We show that chch is required to limit mesodermal gene expression, inhibit Nodal-dependant movement of presumptive ectodermal cells and repress the transcriptional response to Nodal signaling. These findings reveal a dynamic role for chch in regulating cell movement and fate during early development.