Specification of the three germ layers by graded Nodal signaling has long been seen as a paradigm for patterning through a single morphogen gradient. However, by exploiting the unique properties of the zebrafish embryo to capture the dynamics of signaling and cell fate allocation, we now demonstrate that Nodal functions in an incoherent feedforward loop, together with Fgf, to determine the pattern of endoderm and mesoderm specification. We show that Nodal induces long-range Fgf signaling while simultaneously inducing the cell-autonomous Fgf signaling inhibitor Dusp4 within the first two cell tiers from the margin. The consequent attenuation of Fgf signaling in these cells allows specification of endoderm progenitors, while the cells further from the margin, which receive Nodal and/or Fgf signaling, are specified as mesoderm. This elegant model demonstrates the necessity of feedforward and feedback interactions between multiple signaling pathways for providing cells with temporal and positional information.