The hypoblast (equivalent to the mouse anterior visceral endoderm) of the chick embryo plays a role in regulating embryonic polarity. Surprisingly, hypoblast removal causes multiple embryonic axes to form, suggesting that it emits an inhibitor of axis formation. We show that Cerberus (a multifunctional antagonist of Nodal, Wnt, and BMP signaling) is produced by the hypoblast and inhibits primitive streak formation. This activity is mimicked by Cerberus-Short (CerS), which only inhibits Nodal. Nodal misexpression can initiate an ectopic primitive streak, but only when the hypoblast is removed. We propose that, during normal development, the primitive streak forms only when the hypoblast is displaced away from the posterior margin by the endoblast, which lacks Cerberus.