Echinoderms, which are phylogenetically related to vertebrates and produce large numbers of transparent embryos that can be experimentally manipulated, offer many advantages for the analysis of the gene regulatory networks (GRN) regulating germ layer formation. During development of the sea urchin embryo, the ectoderm is the source of signals that pattern all three germ layers along the dorsal-ventral axis. How this signaling center controls patterning and morphogenesis of the embryo is not understood. Here, we report a large-scale analysis of the GRN deployed in response to the activity of this signaling center in the embryos of the Mediterranean sea urchin Paracentrotus lividus, in which studies with high spatial resolution are possible. By using a combination of in situ hybridization screening, overexpression of mRNA, recombinant ligand treatments, and morpholino-based loss-of-function studies, we identified a cohort of transcription factors and signaling molecules expressed in the ventral ectoderm, dorsal ectoderm, and interposed neurogenic ("ciliary band") region in response to the known key signaling molecules Nodal and BMP2/4 and defined the epistatic relationships between the most important genes. The resultant GRN showed a number of striking features. First, Nodal was found to be essential for the expression of all ventral and dorsal marker genes, and BMP2/4 for all dorsal genes. Second, goosecoid was identified as a central player in a regulatory sub-circuit controlling mouth formation, while tbx2/3 emerged as a critical factor for differentiation of the dorsal ectoderm. Finally, and unexpectedly, a neurogenic ectoderm regulatory circuit characterized by expression of "ciliary band" genes was triggered in the absence of TGF beta signaling. We propose a novel model for ectoderm regionalization, in which neural ectoderm is the default fate in the absence of TGF beta signaling, and suggest that the stomodeal and neural subcircuits that we uncovered may represent ancient regulatory pathways controlling embryonic patterning.