Promotes differentiation of dorsal tissues. May be involved in the mediation of Ndr2 signaling during mesoderm and axis formation during embryogenesis. In the cytoplasm in the absence of ligand. Migration to the nucleus when complexed with Smad4. Expressed both maternally and zygotically. Expressed ubiquitously in the cleavage, blastula, gastrula and early somitogenesis stages. Expression declines during gastrulation. At 26 hours, expressed weakly throughout the head, and more strongly in the mesenchymal neural crest cells behind the eyes and in the endoderm and haemangiogenic region of the tail. Belongs to the dwarfin/SMAD family.