Vertebrate endoderm development has recently become the focus of intense investigation. In this report, we first show that the zebrafishbonnie and clyde (bon) gene plays a critical early role in endoderm formation. bon mutants exhibit a profound reduction in the number of sox17-expressing endodermal precursors formed during gastrulation, and, consequently, a profound reduction in gut tissue at later stages. The endodermal precursors that do form inbon mutants, however, appear to differentiate normally indicating that bon is not required at later steps of endoderm development. We further demonstrate that bon encodes a paired-class homeodomain protein of the Mix family that is expressed transiently before and during early gastrulation in both mesodermal and endodermal progenitors. Overexpression of bon can rescue endodermal gene expression and the formation of a gut tube inbon mutants. Analysis of a newly identified mutant allele reveals that a single amino acid substitution in the DNA recognition helix of the homeodomain creates a dominant interfering form of Bon when overexpressed. We also show through loss- and gain-of-function analyses that Bon functions exclusively downstream of cyclopsand squint signaling. Together, our data demonstrate that Bon is a critical transcriptional regulator of early endoderm formation.