TGFbeta signals play important roles in establishing the body axes and germ layers in the vertebrate embryo. Vg1 is a TGFbeta-related gene that, due to its maternal expression and vegetal localization in Xenopus, has received close examination as a potential regulator of development in Xenopus, zebrafish, and chick. However, a mammalian Vg1 ortholog has not been identified. To isolate mammalian Vg1 we screened a mouse expression library with a Vg1-specific monoclonal antibody and identified a single cross-reactive clone encoding mouse Gdf1. Gdf1 is expressed uniformly throughout the embryonic region at 5.5-6.5 days postcoitum and later in the node, midbrain, spinal cord, paraxial mesoderm, lateral plate mesoderm, and limb bud. When expressed in Xenopus embryos, native GDF1 is not processed, similar to Vg1. In contrast, a chimeric protein containing the prodomain of Xenopus BMP2 fused to the GDF1 mature domain is efficiently processed and signals via Smad2 to induce mesendoderm and axial duplication. Finally, right-sided expression of chimeric GDF1, but not native GDF1, reverses laterality and results in right-sided Xnr1 expression and reversal of intestinal and heart looping. Therefore, GDF1 can regulate left-right patterning, consistent with the Gdf1 loss-of-function analysis in the mouse (C. T. Rankin, T. Bunton, A. M. Lawler, and S. J. Lee, 2000, Nature Genet. 24, 262-265) and a proposed role for Vg1 in Xenopus. Our results establish that Gdf1 is posttranslationally regulated, that mature GDF1 activates a Smad2-dependent signaling pathway, and that mature GDF1 is sufficient to reverse the left-right axis. Moreover, these findings demonstrate that GDF1 and Vg1 are equivalent in biochemical and functional assays, suggesting that Gdf1 provides a Vg1-like function in the mammalian embryo.