Reciprocal signals from embryonic and extra-embryonic tissues pattern the embryo in proximal-distal (PD) and anterior-posterior (AP) fashion. Here we have analyzed three gene trap mutations of Sall4, of which one (Sall4-1a) led to a hypomorphic and recessive phenotype, demonstrating that Sall4-1a has yet undescribed extra-embryonic and embryonic functions in regulating PD and AP axis formation. In Sall4-1a mutants the self-maintaining autoregulatory interaction between Bmp4, Nodal and Wnt, which determines the PD axis was disrupted because of defects in the extra-embryonic visceral endoderm. More severely, two distinct Sall4 gene-trap mutants (Sall4-1a,b), resembling null mutants, failed to initiate Bmp4 expression in the extra-embryonic ectoderm and Nodal in the epiblast and were therefore unable to initiate PD axis formation. Tetraploid rescue underlined the extra-embryonic nature of the Sall4-1a phenotype and revealed a further embryonic function in Wnt/beta-catenin signaling to elongate the AP axis during gastrulation. This observation was supported through genetic interaction with beta-catenin mutants, since compound heterozygous mutants recapitulated the defects of Wnt3a mutants in posterior development.