Evidence suggests that the specification of primordial germ cells (PGCs) in the mammalian embryo does not depend on maternal determinants. Rather, previous genetic analysis in the mouse has shown that bone morphogenetic protein 4 (Bmp4) is required for the formation of both PGCs and allantois. Bmp4 is expressed in both the trophoblast-derived extraembryonic ectoderm (ExE) and in the epiblast-derived extraembryonic mesoderm (ExM), in which the PGCs, allantois primordium, and angioblasts are first detected. We have shown that Bmp4 made in the ExE functions to induce precursors of PGCs and allantois in the adjacent epiblast, resulting in complete lack of both cell types in homozygous null mutants. However, the function of Bmp4 in the ExM is totally unknown. To address this question, we generated tetraploid (4N) chimeras by aggregating Bmp4 null ES cells with wild-type tetraploid embryos. In this combination, wild-type tetraploid cells contribute to the extraembryonic trophoblast and primitive endoderm lineages but are excluded from the epiblast and its derivatives, including the ExM. Our results clearly demonstrate that Bmp4 made in the ExM does not affect the establishment of either PGC or allantois lineages, but is required for PGC localization and survival and for the differentiation of the allantois. These findings suggest that Bmp4 expressed in epiblast-derived tissues plays vital roles in reproduction by regulating both the development of the germ line and the vascular connection between the embryo and the placenta.