In many organisms the allocation of primordial germ cells (PGCs) is determined by the inheritance of maternal factors deposited in the egg. However, in mammals, inductive cell interactions are required around gastrulation to establish the germ line. Here, we show that Bmp4 homozygous null embryos contain no PGCs. They also lack an allantois, an extraembryonic mesodermal tissue derived, like the PGCs, from precursors in the proximal epiblast. Heterozygotes have fewer PGCs than normal, due to a reduction in the size of the founding population and not to an effect on its subsequent expansion. Analysis of beta-galactosidase activity in Bmp4(lacZneo) embryos reveals that prior to gastrulation, Bmp4 is expressed in the extraembryonic ectoderm. Later, Bmp4 is expressed in the extraembryonic mesoderm, but not in PGCs. Chimera analysis indicates that it is the Bmp4 expression in the extraembryonic ectoderm that regulates the formation of allantois and primordial germ cell precursors, and the size of the founding population of PGCs. The initiation of the germ line in the mouse therefore depends on a secreted signal from the previously segregated, extraembryonic, trophectoderm lineage.