Signaling by members of the TGFβ superfamily is thought to be transduced by Smad proteins. Here, we describe a zebrafish mutant in smad5, designated somitabun (sbn). The dominant maternal and zygotic effect of the sbn^tc24 mutation is caused by a change in a single amino acid in the L3 loop of Smad5 protein which transforms Smad5 into an antimorphic version, inhibiting wild-type Smad5 and related Smad proteins. sbn mutant embryos are strongly dorsalized, similarly to mutants in Bmp2b, its putative upstream signal. Double mutant analyses and RNA injection experiments show that sbn and bmp2b interact and that sbn acts downstream of Bmp2b signaling to mediate Bmp2b autoregulation during early dorsoventral (D-V) pattern formation. Comparison of early marker gene expression patterns, chimera analyses and rescue experiments involving temporally controlled misexpression of bmp or smad in mutant embryos reveal three phases of D-V patterning: an early sbn- and bmp2b-independent phase when a coarse initial D-V pattern is set up, an intermediate sbn- and bmp2b-dependent phase during which the putative morphogenetic Bmp2/4 gradient is established, and a later sbn-independent phase during gastrulation when the Bmp2/4 gradient is interpreted and cell fates are specified.