In Xenopus laevis, Bone morphogenetic proteins induce expression of the transcription factor Gata2 during gastrulation, and Gata2 is required in both ectodermal and mesodermal cells to enable mesoderm to commit to a hematopoietic fate. In the current studies, we identify tril as a Gata2 target gene that is required in both ectoderm and mesoderm for primitive hematopoiesis to occur. Tril is a transmembrane protein that functions as a co-receptor for Toll like receptors to mediate innate immune responses in the adult brain, but developmental roles for this molecule have not been identified. We show that Tril function is required both upstream and downstream of Bmp receptor mediated Smad1 phosphorylation for induction of Bmp target genes. Mechanistically, Tril triggers degradation of the Bmp inhibitor, Smad7. Tril-dependent down regulation of Smad7 relieves repression of endogenous Bmp signaling during gastrulation and this enables mesodermal progenitors to commit to a blood fate. Thus, Tril is a novel component of a Bmp-Gata2 positive feedback loop that plays an essential role in hematopoietic specification.