ABSTRACT The murine allantois is the future umbilical component of the placenta. The base of the allantois is also thought to contain the future germ line. We have examined the fate and developmental potency of cells within the murine allantois during gastrulation. lacZ-expressing headfold-stage allantoises (approximately 8.0 days postcoitum; dpc) were subdivided into three proximodistal regions and transplanted into three sites in synchronous non-transgenic host embryos: the primitive streak at the level of prospective paraxial mesoderm, the primitive streak at the level of lateral plate mesoderm, and the base of the allantois. After 23 hours in culture, operated conceptuses were examined histologically for contribution of donor allantoic cells to the conceptus. None of the allantoic regions contributed to paraxial mesoderm when placed into the fetus, but all three colonized the endothelium and adjacent mesenchyme of the dorsal aorta. The mid-region was most efficient at colonizing endothelium, whereas the base was the only allantoic region to exhibit relative pluripotency, colonizing several derivatives of all three primary germ layers. Differences in the state of differentiation along the proximodistal axis of the allantois were further borne out when the three allantoic regions were placed into the base of the allantois of host conceptuses. Striking differences were observed in final position along the proximodistal axis of the host allantois. Most grafted cells translocated distally from the base; however, basal donor allantoic cells translocated typically only as far as the host’s mid-region, whereas donor allantoic tip cells typically returned to the tip, often colonizing the chorioallantoic fusion junction. Together, our data reveal that the headfold-stage allantois may contain a proximodistal gradient of differentiation, and raise intriguing questions about how this gradient was established and the role it plays in umbilical vasculogenesis.