In Xenopus, dorsal-ventral (D-V) patterning can self-regulate after embryo bisection. This is mediated by an extracellular network of proteins secreted by the dorsal and ventral centers of the gastrula. Different proteins of similar activity can be secreted at these two poles, but under opposite transcriptional control. Here we show that Crescent, a dorsal protein, can compensate for the loss of Sizzled, a ventral protein. Crescent is a secreted Frizzled-Related Protein (sFRP) known to regulate Wnt8 and Wnt11 activity. We now find that Crescent also regulates the BMP pathway. Crescent expression was increased by the BMP antagonist Chordin and repressed by BMP4, while the opposite was true for Sizzled. Crescent knock-down increased the expression of BMP target genes, and synergized with Sizzled morpholinos. Thus, Crescent loss-of-function is compensated by increased expression of its ventral counterpart Sizzled. Crescent overexpression dorsalized whole embryos but not ventral half-embryos, indicating that Crescent requires a dorsal component to exert its anti-BMP activity. Crescent protein lost its dorsalizing activity in Chordin-depleted embryos. When co-injected, Crescent and Chordin proteins greatly synergized in the dorsalization of Xenopus embryos. The molecular mechanism of these phenotypes is explained by the ability of Crescent to inhibit Tolloid metalloproteinases, which normally degrade Chordin. Enzyme kinetic studies showed that Crescent was a competitive inhibitor of Tolloid activity, which bound to Tolloid/BMP1 with a K(D) of 11 nM. In sum, Crescent is a new component of the D-V pathway, which functions as the dorsal counterpart of Sizzled, through the regulation of chordinases of the Tolloid family.