The early development of vertebrate embryos is characterized by rapid cell proliferation necessary to support the embryo's growth. During this period, the embryo must maintain a balance between ongoing cell proliferation and mechanisms that arrest or delay the cell cycle to repair oxidative damage and other genotoxic stresses. The ataxia-telangiectasia mutated (ATM) kinase is a critical regulator of the response to DNA damage, acting through downstream effectors, such as p53 and checkpoint kinases (CHK) to mediate cell-cycle checkpoints in the presence of DNA damage. Mice and humans with inactivating mutations in ATM are viable but have increased susceptibility to cancers. The possible role of ATM in limiting cell proliferation in early embryos has not been fully defined. One target of ATM and CHKs is the Cdc25 phosphatase, which facilitates cell-cycle progression by removing inhibitory phosphates from cyclin-dependent kinases (CDK). We have identified a zebrafish mutant, standstill, with an inactivating mutation in cdc25a. Loss of cdc25a in the zebrafish leads to accumulation of cells in late G(2) phase. We find that the novel family member cdc25d is essential for early development in the absence of cdc25a, establishing for the first time that cdc25d is active in vivo in zebrafish. Surprisingly, we find that cell-cycle progression in cdc25a mutants can be rescued by chemical or genetic inhibition of ATM. Checkpoint activation in cdc25a mutants occurs despite the absence of increased DNA damage, highlighting the role of Cdc25 proteins to balance constitutive ATM activity during early embryonic development.