Axis formation is one of the earliest patterning events in plant and animal embryogenesis. In Arabidopsis, the main axis of the embryo is evident at the asymmetric division of the zygote into a small, embryonic apical cell and a large extraembryonic basal cell. Here we show that the homeobox genes WOX2 and WOX8, which are initially coexpressed in the zygote, act as complementary cell fate regulators in the apical and basal lineage, respectively. Furthermore, WOX8 expression in the basal cell lineage is required for WOX2 expression and normal development of the proembryo, suggesting an inductive mechanism. The identified WOX cascade is required for normal expression of a reporter gene of the auxin efflux carrier PIN1 and for the formation of auxin response maxima in the proembryo. Thus, our results link the spatial separation of WOX transcription factors to localized auxin response and the formation of the main body axis in the embryo.