In zebrafish development, Nodal signaling is critical for the induction of endoderm and mesoderm. Three transcription factors downstream of Nodal, Bonnie and Clyde (Bon), Faust (Fau)/Gata5 and Casanova (Cas), are required for endoderm induction. However, it is not yet fully understood how the Nodal signaling pathway regulates the decision process of endoderm and mesoderm induction. In this study, we focused on Fgf signaling, downstream of Nodal signaling, during endoderm induction. We found that activation of Fgf signaling decreases the number of cas-expressing endodermal cells. Conversely, inhibition of this signaling increases the number of endodermal cells without affecting the expression of Nodal, Nodal antagonists, bon or fau/gata5. Inhibition of Fgf signaling in endoderm mutants suggests that this signaling negatively regulates cas expression by a pathway parallel to Bon and Fau/Gata5 in the molecular cascade leading to endoderm. Furthermore, activation of Fgf signaling can overcome Cas-mediated abrogation of mesodermal gene expression. Altogether, these results suggest that Fgf signaling negatively regulates endoderm induction, possibly through repression of cas expression and down-regulation of Cas function.