Summary The preimplantation period of mouse early embryonic development is devoted to the specification of two extraembryonic tissues and their spatial segregation from the pluripotent epiblast. During this period two cell fate decisions are made while cells gradually lose their totipotency. The first fate decision involves the segregation of the extraembryonic trophectoderm (TE) lineage from the inner cell mass (ICM); the second occurs within the ICM and involves the segregation of the extraembryonic primitive endoderm (PrE) lineage from the pluripotent epiblast (EPI) lineage, which eventually gives rise to the embryo proper. Multiple determinants, such as differential cellular properties, signaling cues and the activity of transcriptional regulators, influence lineage choice in the early embryo. Here, we provide an overview of our current understanding of the mechanisms governing these cell fate decisions ensuring proper lineage allocation and segregation, while at the same time providing the embryo with an inherent flexibility to adjust when perturbed. genesis 51:219–233. © 2013 Wiley Periodicals, Inc.