Transforming growth factor beta (TGF-beta) signals regulate multiple processes during development and in adult. We recently showed that tomoregulin-1 (TMEFF1), a transmembrane protein, selectively inhibits nodal but not activin in early Xenopus embryos. Here we report that TMEFF1 binds to the nodal coreceptor Cripto, but does not associate with either nodal or the type I ALK (activin receptor-like kinase) 4 receptor in coimmunoprecipitation assays. The inhibition of the nodal signaling by TMEFF1 in Xenopus ectodermal explants is rescued with wild-type but not mutant forms of Cripto. Furthermore, we show that the Cripto-FRL1-Cryptic (CFC) domain in Cripto, which is essential for its binding to ALK4, is also important for its interaction with TMEFF1. Our results demonstrate for the first time that nodal signaling can be regulated by a novel mechanism of blocking the Cripto coreceptor.