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The interaction between bone morphogenetic proteins (BMPs) and their antagonist, Noggin, is critical for normal development. Noggin null mice die at birth with a severely malformed skeleton that is postulated to reflect the activity of unopposed BMP signaling. However, the widespread expression and redundancy of different BMPs have made it difficult to identify a specific role for individual BMPs during mammalian skeletal morphogenesis. Here, we report the effects of modifying Bmp4 dosage on the skeletal development of Noggin mutant mice. The reduction of Bmp4 dosage results in an extensive rescue of the axial skeleton of Noggin mutant embryos. In contrast, the appendicular skeletal phenotype of Noggin mutants was unchanged. Analysis of molecular markers of somite formation and somite patterning suggests that the loss of Noggin results in the formation of small mispatterned somites. Mis-specification and growth retardation rather than cell death most likely account for the subsequent reduction or loss of axial skeletal structures. The severe Noggin phenotype correlates with Bmp4-dependent ectopic expression of Bmp4 in the paraxial mesoderm consistent with Noggin antagonizing an auto-inductive feed-forward mechanism. Thus, specific interactions between Bmp4 and Noggin in the early embryo are critical for establishment and patterning of the somite and subsequent axial skeletal morphogenesis.