The vertebrate Fgf8 gene produces multiple protein isoforms by alternative splicing. Two evolutionarily conserved spliceforms, Fgf8a and Fgf8b, exhibit distinct bioactivities, with Fgf8b having a more potent inductive activity due to higher affinity for Fgf receptors. To investigate the in vivo requirement for Fgf8b, we created a splice-site mutation abolishing Fgf8b expression in mice. Analysis of this mutant has uncovered a novel function of Fgf8 signaling before the onset of gastrulation. We show that the loss of Fgf8b disrupts the induction of the brachyury gene in the pregastrular embryo and, in addition, disrupts the proper alignment of the anteroposterior axis with the shape of the embryo and the uterine axes at embryonic day (E) 6.5. Importantly, Fgf8-null embryos display the same phenotype as Fgf8b-deficient embryos at E6.5, demonstrating that signaling by Fgf8b is specifically required for development of the pregastrular embryo. By contrast, during gastrulation, Fgf8a can partially compensate for the loss of Fgf8b in mesoderm specification. We show that an increased level of Fgf8a expression, which leads to Fgf4 expression in the primitive streak, can also promote mesoderm migration in the absence of Fgf8b. Therefore, different Fgf signals may have distinct requirements for the morphogenesis and gene regulation before and during gastrulation. Importantly, our findings implicate Fgf8 in the morphogenetic process that establishes the defined relationship between the axes of the embryo and the uterus at the beginning of gastrulation, a perplexing phenomenon discovered two decades ago.