The vertebrate body plan follows stereotypical dorsal-ventral (D-V) tissue differentiation controlled by bone morphogenetic proteins (BMPs) and secreted BMP antagonists, such as Chordin. The three germ layers-ectoderm, mesoderm, and endoderm-are affected coordinately by the Chordin-BMP morphogen system. However, extracellular morphogen gradients of endogenous proteins have not been directly visualized in vertebrate embryos to date. In this study, we improved immunolocalization methods in Xenopus embryos and analyzed the distribution of endogenous Chordin using a specific antibody. Chordin protein secreted by the dorsal Spemann organizer was found to diffuse along a narrow region that separates the ectoderm from the anterior endoderm and mesoderm. This Fibronectin-rich extracellular matrix is called "Brachet's cleft" in the Xenopus gastrula and is present in all vertebrate embryos. Chordin protein formed a smooth gradient that encircled the embryo, reaching the ventral-most Brachet cleft. Depletion with morpholino oligos showed that this extracellular gradient was regulated by the Chordin protease Tolloid and its inhibitor Sizzled. The Chordin gradient, as well as the BMP signaling gradient, was self-regulating and, importantly, was able to rescale in dorsal half-embryos. Transplantation of Spemann organizer tissue showed that Chordin diffused over long distances along this signaling highway between the ectoderm and mesoderm. Chordin protein must reach very high concentrations in this narrow region. We suggest that as ectoderm and mesoderm undergo morphogenetic movements during gastrulation, cells in both germ layers read their positional information coordinately from a single morphogen gradient located in Brachet's cleft.