Wnt/beta-catenin signaling regulates many aspects of early vertebrate development, including patterning of the mesoderm and neurectoderm during gastrulation. In zebrafish, Wnt signaling overcomes basal repression in the prospective caudal neurectoderm by Tcf homologs that act as inhibitors of Wnt target genes. The vertebrate homolog of Drosophila nemo, nemo-like kinase (Nlk), can phosphorylate Tcf/Lef proteins and inhibit the DNA-binding ability of beta-catenin/Tcf complexes, thereby blocking activation of Wnt targets. By contrast, mutations in a C. elegans homolog show that Nlk is required to activate Wnt targets that are constitutively repressed by Tcf. We show that overexpressed zebrafish nlk, in concert with wnt8, can downregulate two tcf3 homologs, tcf3a and tcf3b, that repress Wnt targets during neurectodermal patterning. Inhibition of nlk using morpholino oligos reveals essential roles in regulating ventrolateral mesoderm formation in conjunction with wnt8, and in patterning of the midbrain, possibly functioning with wnt8b. In both instances, nlk appears to function as a positive regulator of Wnt signaling. Additionally, nlk strongly enhances convergent/extension phenotypes associated with wnt11/silberblick, suggesting a role in modulating cell movements as well as cell fate.