Interactions between BMP4 and its inhibitor, noggin, regulate patterning of somites and neural crest. During mesoderm development, noggin mRNA is expressed in the intermediate mesoderm. Upon segmentation, it is detected in the lateral portion of epithelial somites becoming progressively medialized as they mature. In dissociated segments, noggin becomes transiently confined to the dorsomedial lip of the dermomyotome. Here, we investigated the factor(s) that control this lateral-to-medial shift in transcription of somitic noggin. Inhibition of BMP activity in the caudal lateral plate/intermediate mesoderm prevented noggin transcription in the lateral somite. Further rostrally (or later in development), inhibition of tube-derived BMP, but not of Wnt activity, prevented initial noggin expression in the dorsomedial lip of the dermomyotome. Moreover, BMP4 was sufficient to trigger initial expression of noggin even in the absence of ectoderm and/or neural tube, suggesting a direct action on the dorsomedial somite. Thus, the patterns of noggin transcription in somites are directly regulated by BMP4 activities emanating first from the mesoderm and later from the neural tube. Expression patterns of BMP4 and of type IA BMP receptors are spatiotemporally compatible with this lateral-to-medial shift. These results highlight the existence in the neural tube–mesoderm complex of a regulatory loop by which BMP positively regulates transcription of noggin, which in turn represses further ligand activity.