Formation of a eutherian mammal requires concurrent establishment of embryonic and extraembryonic lineages. The functions of the trophectoderm and primitive endoderm are to enable implantation in the maternal uterus, axis specification and delivery of nutrients. The pluripotent epiblast represents the founding cell population of the embryo proper, which is protected from ectopic and premature differentiation until it is required to respond to inductive cues to form the fetus. While positional information plays a major role in specifying the trophoblast lineage, segregation of primitive endoderm from epiblast depends upon gradual acquisition of transcriptional identity, directed but not initiated by fibroblast growth factor (FGF) signalling. Following early cleavage divisions and formation of the blastocyst, cells of the inner cell mass lose totipotency. Developing epiblast cells transiently attain the state of naive pluripotency and competence to self-renew in vitro as embryonic stem cells and in vivo by means of diapause. This property is lost after implantation as the epiblast epithelializes and becomes primed in preparation for gastrulation and subsequent organogenesis.