Several membrane-associated proteins are known to modulate the activity and range of potent morphogenetic signals during development. In particular,members of the EGF-CFC family encode glycosyl-phosphatidylinositol(GPI)-linked proteins that are essential for activity of the transforming growth factor β (TGFβ) ligand Nodal, a factor that plays a central role in establishing the vertebrate body plan. Genetic and biochemical studies have indicated that EGF-CFC proteins function as cell-autonomous co-receptors for Nodal; by contrast, cell culture data have suggested that the mammalian EGF-CFC protein Cripto can act as a secreted signaling factor. Here we show that Cripto acts non-cell-autonomously during axial mesendoderm formation in the mouse embryo and may possess intercellular signaling activity in vivo. Phenotypic analysis of hypomorphic mutants demonstrates that Criptois essential for formation of the notochordal plate, prechordal mesoderm and foregut endoderm during gastrulation. Remarkably, Cripto null mutant cells readily contribute to these tissues in chimeras, indicating non-cell-autonomy. Consistent with these loss-of-function analyses,gain-of-function experiments in chick embryos show that exposure of node/head process mesoderm to soluble Cripto protein results in alterations in cell fates toward anterior mesendoderm, in a manner that is dependent on Nodal signaling. Taken together, our findings support a model in which Cripto can function in trans as an intercellular mediator of Nodal signaling activity.