Formation of the left-right axis involves a symmetry-breaking signal originating in the node or its equivalents, which increases TGF-beta signaling on the left side of the embryo and ultimately leads to asymmetric patterning of the viscera. DAN domain proteins are extracellular inhibitors of TGF-beta ligands, and are involved in regulating the left-right axis in chick, mouse and zebrafish. We find that Coco, a Xenopus DAN family member, and two TGF-beta ligands, Xnr1 and derrière, are coexpressed in the posterior paraxial mesoderm at neurula stage. Side-specific protein depletion demonstrated that left-right patterning requires Coco exclusively on the right side, and Xnr1 and derrière exclusively on the left, despite their bilateral expression pattern. In the absence of Coco, the TGF-beta signal is bilateral. Interactions among the three proteins show that derrière is required for normal levels of Xnr1 expression, while Coco directly inhibits both ligands. We conclude that derrière, Xnr1, and Coco define a posttranscriptionally regulated signaling center, which is a necessary link in the signaling chain leading to an increased TGF-beta signal on the left side of the embryo.