The mouse homeobox gene Noto represents the homologue of zebrafish floating head (flh) and is expressed in the organizer node and in the nascent notochord. Previous analyses suggested that Noto is required exclusively for the formation of the caudal part of the notochord. Here, we show that Noto is also essential for node morphogenesis, controlling ciliogenesis in the posterior notochord, and the establishment of laterality, whereas organizer functions in anterior-posterior patterning are apparently not compromised. In mutant embryos, left-right asymmetry of internal organs and expression of laterality markers was randomized. Mutant posterior notochord regions were variable in size and shape, cilia were shortened with highly irregular axonemal microtubuli, and basal bodies were, in part, located abnormally deep in the cytoplasm. The transcription factor Foxj1, which regulates the dynein gene Dnahc11 and is required for the correct anchoring of basal bodies in lung epithelial cells, was down-regulated in mutant nodes. Likewise, the transcription factor Rfx3, which regulates cilia growth, was not expressed in Noto mutants, and various other genes important for cilia function or assembly such as Dnahc5 and Nphp3 were down-regulated. Our results establish Noto as an essential regulator of node morphogenesis and ciliogenesis in the posterior notochord, and suggest Noto acts upstream of Foxj1 and Rfx3.