BACKGROUND: Nodals are secreted signaling proteins with many roles in vertebrate development. Here, we identify a new role for Nodal signaling in regulating closure of the rostral neural tube of zebrafish. RESULTS: We find that the neural tube in the presumptive forebrain fails to close in zebrafish Nodal signaling mutants. For instance, the cells that will give rise to the pineal organ fail to move from the lateral edges of the neural plate to the midline of the diencephalon. The open neural tube in Nodal signaling mutants may be due in part to reduced function of N-cadherin, a cell adhesion molecule expressed in the neural tube and required for neural tube closure. N-cadherin expression and localization to the membrane are reduced in fish that lack Nodal signaling. Further, N-cadherin mutants and morphants have a pineal phenotype similar to that of mutants with deficiencies in the Nodal pathway. Overexpression of an activated form of the TGFbeta Type I receptor Taram-A (Taram-A*) cell autonomously rescues mesendoderm formation in fish with a severe decrease in Nodal signaling. We find that overexpression of Taram-A* also corrects their open neural tube defect. This suggests that, as in mammals, the mesoderm and endoderm have an important role in regulating closure of the anterior neural tube of zebrafish. CONCLUSIONS: This work helps establish a role for Nodal signals in neurulation, and suggests that defects in Nodal signaling could underlie human neural tube defects such as exencephaly, a fatal condition characterized by an open neural tube in the anterior brain.