Fibroblast growth factor (Fgf) proteins are important regulators of pharyngeal arch development. Analyses of Fgf8 function in chick and mouse and Fgf3 function in zebrafish have demonstrated a role for Fgfs in the differentiation and survival of postmigratory neural crest cells (NCC) that give rise to the pharyngeal skeleton. Here we describe, in zebrafish, an earlier, essential function for Fgf8 and Fgf3 in regulating the segmentation of the pharyngeal endoderm into pouches. Using time-lapse microscopy, we show that pharyngeal pouches form by the directed lateral migration of discrete clusters of endodermal cells. In animals doubly reduced for Fgf8 and Fgf3, the migration of pharyngeal endodermal cells is disorganized and pouches fail to form. Transplantation and pharmacological experiments show that Fgf8 and Fgf3 are required in the neural keel and cranial mesoderm during early somite stages to promote first pouch formation. In addition, we show that animals doubly reduced for Fgf8 and Fgf3 have severe reductions in hyoid cartilages and the more posterior branchial cartilages. By examining early pouch and later cartilage phenotypes in individual animals hypomorphic for Fgf function, we find that alterations in pouch structure correlate with later cartilage defects. We present a model in which Fgf signaling in the mesoderm and segmented hindbrain organizes the segmentation of the pharyngeal endoderm into pouches. Moreover, we argue that the Fgf-dependent morphogenesis of the pharyngeal endoderm into pouches is critical for the later patterning of pharyngeal cartilages.