REDD1/redd1 is a stress-response gene that is induced under various stressful conditions such as hypoxia, DNA damage, and energy stress. The increased REDD1 inhibits mTOR signaling and cell growth. Here we report an unexpected role of Redd1 in regulating dorsoventral patterning in zebrafish embryos and the underlying mechanisms. Zebrafish redd1 mRNA is maternally deposited. Although it is ubiquitously detected in many adult tissues, its expression is highly tissue-specific and dynamic during early development. Hypoxia and heat shock strongly induce redd1 expression in zebrafish embryos. Knockdown of Redd1 using two independent morpholinos results in dorsalized embryos and this effect can be rescued by injecting redd1 mRNA. Forced expression of Redd1 ventralizes embryos. Co-expression of Redd1 with Wnt3a or a constitutively active form of β-catenin suggests that Redd1 alters dorsoventral patterning by antagonizing the Wnt/β-catenin signaling pathway. These findings have unraveled a novel role of Redd1 in early development by antagonizing Wnt/β-catenin signaling.