Involved in ventralization. May mediate Bmp2b signaling during embryonic dorsal-ventral pattern formation, and may itself be a transcriptional target for Smad5-mediated Bmp2b signaling. May form trimers with another Smad1 and the co-Smad Smad4. In the cytoplasm in the absence of ligand. Migration to the nucleus when complexed with Smad4. Zygotically expressed. First detected 1 h after the midblastula transition. During gastrulation, expression is restricted to ventral regions. Later, expressed in the somites, eyes and a subset of dorsal cells in the hindbrain. Levels increase until the end of gastrulation and then remain high. Belongs to the dwarfin/SMAD family.