The anterior visceral endoderm plays a pivotal role in establishing anterior-posterior polarity of the mouse embryo, but the molecular nature of the signals required remains to be determined. Here, we demonstrate that Cerberus-like^−/−;Lefty1^−/− compound mutants can develop a primitive streak ectopically in the embryo. This defect is not rescued in chimeras containing wild-type embryonic, and Cerberus-like^−/−;Lefty1^−/− extraembryonic, cells but is rescued in Cerberus-like^−/−; Lefty1^−/− embryos after removal of one copy of the Nodal gene. Our findings provide support for a model whereby Cerberus-like and Lefty1 in the anterior visceral endoderm restrict primitive streak formation to the posterior end of mouse embryos by antagonizing Nodal signaling. Both antagonists are also required for proper patterning of the primitive streak.