Glucocorticoid receptor (GR) signaling is thought to play a key role in embryogenesis, but its specific developmental effects remain unclear. Cortisol is the primary ligand for GR activation in teleosts, and in zebrafish (Danio rerio), the prehatch embryo content of this steroid is of maternal origin. Using early zebrafish developmental stages, we tested the hypothesis that GR signaling is critical for embryo growth and hatching. In zebrafish, maternal GR mRNA is degraded quickly, followed by zygotic synthesis of the receptor. GR protein is widely expressed throughout early development, and we were able to knockdown this protein using morpholino oligonucleotides. This led to a more than 70% reduction in mRNA abundance of matrix metalloproteinase-13 (mmp13), a glucocorticoid-responsive gene. The GR morphants displayed delayed somitogenesis, defects in somite and tail morphogenesis, reduced embryo size, and rarely survived after hatch. This correlated with altered expression of myogenic markers, including myogenin, myostatin, and muscle-specific myosin heavy chain and troponin genes. A key finding was a 70–90% reduction in the mRNA abundance of bone morphogenetic proteins (BMP), including bmp2a, bmp2b, and bmp4 in GR morphants. Bioinformatics analysis confirmed multiple putative glucocorticoid response elements upstream of these BMP genes. GR morphants displayed reduced expression of BMP-modulated genes, including eve1 and pax3. Zebrafish GR mRNA injection rescued the GR morphant phenotype and reversed the disrupted expression of BMP and myogenic genes. Our results for the first time indicate that GR signaling is essential for zebrafish muscle development, and we hypothesize a role for BMP morphogens in this process.