R-spondins are a family of secreted proteins that play important roles in embryonic development and cancer. R-spondins have been shown to modulate the Wnt pathway; however, their involvement in other developmental signaling processes have remained largely unstudied. Here, we describe a novel function of Rspo2 in FGF pathway regulation in vivo Overexpressed Rspo2 inhibited elongation of Xenopus ectoderm explants and Erk1 activation in response to FGF. By contrast, the constitutively active form of Mek1 stimulated Erk1 even in the presence of Rspo2, suggesting that Rspo2 functions upstream of Mek1. The observed inhibition of FGF signaling was accompanied by the downregulation of the FGF target genes tbxt/brachyury and cdx4, which mediate anterioposterior axis specification. Importantly, these target genes were upregulated in Rspo2-depleted explants. The FGF inhibitory activity was mapped to the thrombospondin type 1 region, contrasting the known function of the Furin-like domains in Wnt signaling. Further domain analysis revealed an unexpected intramolecular interaction that might control Rspo2 signaling output. We conclude that, in addition to its role in Wnt signaling, Rspo2 acts as an FGF antagonist during mesoderm formation and patterning.