Axis formation occurs in plants, as in animals, during early embryogenesis. However, the underlying mechanism is not known. Here we show that the first manifestation of the apical-basal axis in plants, the asymmetric division of the zygote, produces a basal cell that transports and an apical cell that responds to the signalling molecule auxin. This apical-basal auxin activity gradient triggers the specification of apical embryo structures and is actively maintained by a novel component of auxin efflux, PIN7, which is located apically in the basal cell. Later, the developmentally regulated reversal of PIN7 and onset of PIN1 polar localization reorganize the auxin gradient for specification of the basal root pole. An analysis of pin quadruple mutants identifies PIN-dependent transport as an essential part of the mechanism for embryo axis formation. Our results indicate how the establishment of cell polarity, polar auxin efflux and local auxin response result in apical-basal axis formation of the embryo, and thus determine the axiality of the adult plant.