In bilaterians, three orthogonal body axes define the animal form, with distinct anterior–posterior, dorsal–ventral and left–right asymmetries. The key signalling factors are Wnt family proteins for the anterior–posterior axis, Bmp family proteins for the dorsal–ventral axis and Nodal for the left–right axis1. Cnidarians, the sister group to bilaterians, are characterized by one oral–aboral body axis, which exhibits a distinct biradiality of unknown molecular nature. Here we analysed the biradial growth pattern in the radially symmetrical cnidarian polyp Hydra, and we report evidence of Nodal in a pre-bilaterian clade. We identified a Nodal-related gene (Ndr) in Hydra magnipapillata, and this gene is essential for setting up an axial asymmetry along the main body axis. This asymmetry defines a lateral signalling centre, inducing a new body axis of a budding polyp orthogonal to the mother polyp’s axis. Ndr is expressed exclusively in the lateral bud anlage and induces Pitx, which encodes an evolutionarily conserved transcription factor that functions downstream of Nodal. Reminiscent of its function in vertebrates2, 3, Nodal acts downstream of β-Catenin signalling. Our data support an evolutionary scenario in which a ‘core-signalling cassette’ consisting of β-Catenin, Nodal and Pitx pre-dated the cnidarian–bilaterian split. We presume that this cassette was co-opted for various modes of axial patterning: for example, for lateral branching in cnidarians and left–right patterning in bilaterians.