Genetic and molecular evidence indicates that visceral endoderm, an extraembryonic cell lineage, is required for gastrulation, early anterior neural patterning, cell death and specification of posterior mesodermal cell fates. We show that variant Hepatocyte Nuclear Factor 1 (vHNF1), a homeodomain-containing transcription factor first expressed in the primitive endoderm, is required for the specification of visceral endoderm. vHnf1-deficient mouse embryos develop normally to the blastocyst stage, start implantation, but die soon afterwards, with abnormal or absent extraembryonic region, poorly organised ectoderm and no discernible visceral or parietal endoderm. However, immunostaining analysis of E5.5 nullizygous mutant embryos revealed the presence of parietal endoderm-like cells lying on an abnormal basal membrane. Homozygous mutant blastocyst outgrowths or differentiated embryonic stem cells do not express early or late visceral endoderm markers. In addition, in vHnf1 null embryoid bodies there is no activation of the transcription factors HNF-4alpha1, HNF1alpha and HNF-3gamma. Aggregation of vHnf1-deficient embryonic stem cells with wild-type tetraploid embryos, which contribute exclusively to extraembryonic tissues, rescues periimplantation lethality and allows development to progress to early organogenesis. Our results place vHNF1 in a preeminent position in the regulatory network that specifies the visceral endoderm and highlight the importance of this cell lineage for proper growth and differentiation of primitive ectoderm in pregastrulating embryos.