Acts as a positive cofactor of GATA transcription factors to establish the identity of the ventral mesoderm during gastrulation. Down-regulation in the dorsal mesoderm is necessary for the proper formation of this territory since, when present, lmo4 may bind ldb1 and restrict the availability of this cofactor for Spemman organizer transcription factors. At neurula stages, suppresses primary neuron differentiation and modulates gene expression at the Isthmic Organizer of the midbrain-hindbrain boundary (By similarity).