Using a Xenopus expression-cloning screen, we have isolated Gremlin, a novel antagonist of bone morphogenetic protein (BMP) signaling that is expressed in the neural crest. Gremlin belongs to a novel gene family that includes the head-inducing factor Cerberus and the tumor suppressor DAN. We show that all family members are secreted proteins and that they act as BMP antagonists in embryonic explants. We also provide support for the model that Gremlin, Cerberus, and DAN block BMP signaling by binding BMPs, preventing them from interacting with their receptors. In addition, Cerberus alone blocks signaling by Activin- and Nodal-like members of the TGFβ superfamily. Therefore, we propose that Gremlin, Cerberus, and DAN control diverse processes in growth and development by selectively antagonizing the activities of different subsets of TGFβ ligands.