The strength and spatiotemporal activity of Nodal signaling is tightly controlled in early implantation mouse embryos, including by autoregulation and feedback loops, and involves secreted and intracellular antagonists. These control mechanisms, which are established at the extra-embryonic/embryonic interfaces, are essential for anterior-posterior patterning of the epiblast and correct positioning of the primitive streak. Formation of an ectopic primitive streak, or streak expansion, has previously been reported in mutants lacking antagonists that target Nodal signaling. Here, we demonstrate that loss-of-function of a major bone morphogenetic protein (BMP) effector, Smad5, results in formation of an ectopic primitive streak-like structure in mutant amnion accompanied by ectopic Nodal expression. This suggests that BMP/Smad5 signaling contributes to negative regulation of Nodal. In cultured cells, we find that BMP-activated Smad5 antagonizes Nodal signaling by interfering with the Nodal-Smad2/4-Foxh1 autoregulatory pathway through the formation of an unusual BMP4-induced Smad complex containing Smad2 and Smad5. Quantitative expression analysis supports that ectopic Nodal expression in the Smad5 mutant amnion is induced by the Nodal autoregulatory loop and a slow positive-feedback loop. The latter involves BMP4 signaling and also induction of ectopic Wnt3. Ectopic activation of these Nodal feedback loops in the Smad5 mutant amnion results in the eventual formation of an ectopic primitive streak-like structure. We conclude that antagonism of Nodal signaling by BMP/Smad5 signaling prevents primitive streak formation in the amnion of normal mouse embryos.