We have identified and characterized a zebrafish recessive maternal effect mutant, ichabod, that results in severe anterior and dorsal defects during early development. The ichabod mutation is almost completely penetrant, but exhibits variable expressivity. All mutant embryos fail to form a normal embryonic shield; most fail to form a head and notochord and have excessive development of ventral tail fin tissue and blood. Abnormal dorsal patterning can first be observed at 3.5 hpf by the lack of nuclear accumulation of (beta)-catenin in the dorsal yolk syncytial layer, which also fails to express bozozok/dharma/nieuwkoid and znr2/ndr1/squint. At the onset of gastrulation, deficiencies in expression of dorsal markers and expansion of expression of markers of ventral tissues indicate a dramatic alteration of dorsoventral identity. Injection of (beta)-catenin RNA markedly dorsalized ichabod embryos and often completely rescued the phenotype, but no measurable dorsalization was obtained with RNAs encoding upstream Wnt pathway components. In contrast, dorsalization was obtained when RNAs encoding either Bozozok/Dharma/Nieuwkoid or Znr2/Ndr1/Squint were injected. Moreover, injection of (beta)-catenin RNA into ichabod embryos resulted in activation of expression of these two genes, which could also activate each other. RNA injection experiments strongly suggest that the component affected by the ichabod mutation acts on a step affecting (beta)-catenin nuclear localization that is independent of regulation of (beta)-catenin stability. This work demonstrates that a maternal gene controlling localization of (beta)-catenin in dorsal nuclei is necessary for dorsal yolk syncytial layer gene activity and formation of the organizer in the zebrafish.