Recent genetic and embryological experiments have demonstrated that head formation in the mouse embryo is dependent on signals provided by two organising centers during gastrulation, the anterior visceral endoderm (AVE) and the anterior primitive streak (also called the Early Gastrula Organiser, EGO). However the molecular nature of the signals triggering anterior neural formation from the epiblast is not clearly understood. The analysis of mouse mutants has allowed the identification of some of the molecular players involved in the process of head formation. In this review, we describe different mutant embryos in which impairment of visceral endoderm function leads to similar defects in antero-posterior axis specification. These phenotypes are consistent with a role of the AVE in protecting anterior embryonic regions from signals that promote posterior development. We propose that a genetic cascade in the AVE, involving HNF3β, Lim1, Otx2, Smad2 and ActRIB, leads to the production of secreted TGFβ antagonists that protect the anterior epiblast region from Nodal signalling.