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Background Thrombomodulin (TM), an integral membrane protein, has long been known for its anticoagulant activity. Recent studies showed that TM displays multifaceted activities, including the involvement in cell adhesion and collective cell migration in vitro. However, whether TM contributes similarly to these biological processes in vivo remains elusive. Methods We adapted zebrafish, a prominent animal model for studying molecular/cellular activity, embryonic development, diseases mechanism and drug discovery, to examine how TM functions in modulating cell migration during germ layer formation, a normal and crucial physiological process involving massive cell movement in the very early stages of life. In addition, an in vivo assay was developed to examine the anti-hemostatic activity of TM in zebrafish larva. Results We found that zebrafish TM-b, a zebrafish TM-like protein, was expressed mainly in vasculatures and displayed anti-hemostatic activity. Knocking-down TM-b led to malformation of multiple organs, including vessels, heart, blood cells and neural tissues. Delayed epiboly and incoherent movement of yolk syncytial layer were also observed in early TM-b morphants. Whole mount immunostaining revealed the co-localization of TM-b with both actin and microtubules in epibolic blastomeres. Single-cell tracking revealed impeded migration of blastomeres during epiboly in TM-b-deficient embryos. Conclusion Our results showed that TM-b is crucial to the collective migration of blastomeres during germ layer formation. The structural and functional compatibility and conservation between zebrafish TM-b and mammalian TM support the properness of using zebrafish as an in vivo platform for studying the biological significance and medical use of TM. Electronic supplementary material The online version of this article (10.1186/s12929-019-0549-2) contains supplementary material, which is available to authorized users.