A common feature of early vertebrate embryos is that they are surrounded by a simple protective epithelial cell layer. However, it is currently not well understood how the differentiation of this epithelium is controlled. We present data showing that BMP4 is sufficient to promote differentiation of this epithelium in diverse vertebrates. In mouse embryos the outer epithelium forms the trophectoderm which overlies the pluripotent inner cell mass. Xenopus embryos do not have a trophectoderm or inner cell mass but they do have outer epithelial cells and inner deep cells, which follow distinct fates. We have examined the role of BMP4 in the Xenopus epidermis and found that it is sufficient and required for differentiation of the outer epithelial cells. In contrast, BMP4 inhibits genes normally expressed in the deep cells, arguing that BMP4 specifically promotes differentiation of the outer epithelial cells. We then examined the role of BMP4 signalling in mouse ES cells. We found that in the absence of additional factors BMP4 is able to induce ES cells to form a trophectoderm like cell type. Thus, it appears that BMP4 acts to promote differentiation of the first epithelium in both Xenopus and mouse. Our data also suggest that, despite differences between vertebrates, there are conserved pathways which control differentiation of the first epithelial cells.