The cell movements underlying the morphogenesis of the embryonic endoderm, the tissue that will give rise to the respiratory and digestive tracts, are complex and not well understood. Using live imaging combined with genetic labeling, we investigated the cell behaviors and fate of the visceral endoderm during gut endoderm formation in the mouse gastrula. Contrary to the prevailing view, our data reveal no mass displacement of visceral endoderm to extraembryonic regions concomitant with the emergence of epiblast-derived definitive endoderm. Instead, we observed dispersal of the visceral endoderm epithelium and extensive mixing between cells of visceral endoderm and epiblast origin. Visceral endoderm cells remained associated with the epiblast and were incorporated into the early gut tube. Our findings suggest that the segregation of extraembryonic and embryonic tissues within the mammalian embryo is not as strict as believed and that a lineage previously defined as exclusively extraembryonic contributes cells to the embryo.