The striking developmental plasticity of early mammalian embryos has been known since the classical experiments performed in the 1950s and 1960s. There are many lines of evidence that the mammalian embryo is able to continue normal development even when exposed to severe experimental manipulations of the number and position of cells within the embryo. These observations have raised the question about the mechanisms involved in emergence, maintenance, and progressive restriction of this plasticity. Only recently, we have begun to understand these mechanisms. In this review, in order to explain the molecular and cellular events underlying the remarkable plasticity of the early mammalian embryo, we discuss results of classical experiments demonstrating developmental potential of mammalian embryos and link them with the novel data provided by contemporary experimental approaches. We also show how developmental flexibility of mammalian embryos is manifested in nature, and discuss its implications for basic research and medicine.