In the zebrafish embryo, the mesoderm and endoderm originate from common precursors and segregate during gastrulation by mechanisms that are largely unknown. Understanding how the signalling pathways that regulate endoderm and mesoderm formation interact is crucial to understanding how the germ layers are established. Here, we have analysed how the FGF and BMP pathways interact with Nodal signalling during the process of endoderm formation. We found that activation of the FGF/ERK pathway disrupts endoderm formation in the embryo and antagonizes the ability of an activated form of Tar/Acvr1b to induce endoderm at the animal pole. By contrast, inhibition of FGF signalling increases the number of endodermal precursors and potentiates the ability of Tar*/Acvr1b to induce endoderm at the animal pole. Using a pharmacological inhibitor of the FGF receptor, we show that reducing FGF signalling partially rescues the deficit of endoderm precursors in bon mutant embryos. Furthermore, we found that overexpression of BMPs compromises endoderm formation, suggesting that formation of endoderm precursors is negatively regulated by BMPs on the ventral side. We show that simultaneous inhibition of the FGF/Ras and BMP pathways results in a dramatic increase in the number of endoderm precursors. Taken together, these data strongly suggest that BMP and FGF-ERK pathways cooperate to restrict the number of endodermal progenitors induced in response to Nodal signalling. Finally, we investigated the molecular basis for the FGF-MAPK-dependent repression of endoderm formation. We found that FGF/ERK signalling causes phosphorylation of Casanova/Sox32, an important regulator of endoderm determination, and provide evidence that this phosphorylation attenuates its ability to induce sox17. These results identify a molecular mechanism whereby FGF attenuates Nodal-induced endodermal transcription factors and highlight a potential mechanism whereby mesoderm and endoderm fates could segregate from each other.