The rel/NF-kappaB transcription factor Dorsal controls dorsoventral (DV) axis formation in Drosophila. A stable nuclear gradient of Dorsal directly regulates approximately 50 target genes. In Tribolium castaneum (Tc), a beetle with an ancestral type of embryogenesis, the Dorsal nuclear gradient is not stable, but rapidly shrinks and disappears. We find that negative feedback accounts for this dynamic behavior: Tc-Dorsal and one of its target genes activate transcription of the IkB homolog Tc-cactus, terminating Dorsal function. Despite its transient role, Tc-Dorsal is strictly required to initiate DV polarity, as in Drosophila. However, unlike in Drosophila, embryos lacking Tc-Dorsal display a periodic pattern of DV cell fates along the AP axis, indicating that a self-organizing ectodermal patterning system operates independently of mesoderm or maternal DV polarity cues. Our results also elucidate how extraembryonic tissues are organized in short-germ embryos, and how patterning information is transmitted from the early embryo to the growth zone.