Zebrafish one-eyed pinhead (oep) is essential for embryonic axis and dorsal midline formation by promoting Nodal signalling and is thought to act as a permissive factor. Here we describe that oep elicits profound phenotypic effects when overexpressed in Xenopus and zebrafish. In Xenopus, wild-type oep inhibits mesoderm induction, disrupts axis formation and neuralizes animal caps. A secreted Oep dorsoanteriorizes and neuralizes Xenopus embryos indicative of BMP inhibition. In zebrafish, misexpression of smad1 in oep mutant embryos also reveals an interaction of oep with BMP signalling. Furthermore, the phenotypic effect of nodal overexpression can be rescued by coexpression of oep both in Xenopus and zebrafish. Taken together, our results support an interaction between oep and nodal but they suggest also (1) that the role of oep in Nodal signalling may include negative as well as positive regulation, (2) that oep is able to function in an active fashion and (3) that oep exerts a regulatory effect on the BMP signalling pathway.