In the postimplantation mouse embryo, axial patterning begins with the restriction of expression of a set of genes to the distal visceral endoderm (DVE). This proximodistal (PD) axis is subsequently transformed into an anteroposterior axis as the VE migrates anteriorly to form the anterior visceral endoderm (AVE). Both Nodal and Wnt signaling pathways are involved in these events. We show here that loss of function in the adenomatous polyposis coli gene (Apc) leads to constitutive beta-catenin activity that induces a proximalization of the epiblast with the activation of a subset of posterior mesendodermal genes, and loss of ability to induce the DVE. The loss of some DVE genes such as Hex and goosecoid is rescued in chimeras where only the epiblast was wild type; however, these DVE markers were no longer restricted distally but covered the entire epiblast. Thus, the Apc gene is needed in both embryonic and extraembryonic lineages for normal PD patterning around implantation, suggesting that early restricted activation of the Wnt pathway may be important for initiating axial asymmetries. In addition, we found that nuclear beta-catenin and other molecular markers are asymmetrically expressed by 4.5 days.