During embryonic development, mechanical forces are essential for cellular rearrangements driving tissue morphogenesis. Here, we show that in the early zebrafish embryo, friction forces are generated at the interface between anterior axial mesoderm (prechordal plate, ppl) progenitors migrating towards the animal pole and neurectoderm progenitors moving in the opposite direction towards the vegetal pole of the embryo. These friction forces lead to global rearrangement of cells within the neurectoderm and determine the position of the neural anlage. Using a combination of experiments and simulations, we show that this process depends on hydrodynamic coupling between neurectoderm and ppl as a result of E-cadherin-mediated adhesion between those tissues. Our data thus establish the emergence of friction forces at the interface between moving tissues as a critical force-generating process shaping the embryo.