Insulin-like growth factor I receptor (Igf1r) signaling controls proliferation, differentiation, growth, and cell survival in many tissues; and its deregulated activity is involved in tumorigenesis. Although important during fetal growth and postnatal life, a function for the Igf pathway during preimplantation development has not been described. We show that abrogating Igf1r signaling with specific inhibitors blocks trophectoderm formation and compromises embryo survival during murine blastocyst formation. In normal embryos total Igf1r is present throughout the membrane, whereas the activated form is found exclusively at cell contact sites, colocalizing with E-cadherin. Using genetic domain switching, we show a requirement for E-cadherin to maintain proper activation of Igf1r. Embryos expressing exclusively a cadherin chimera with N-cadherin extracellular and E-cadherin intracellular domains (NcEc) fail to form a trophectoderm and cells die by apoptosis. In contrast, homozygous mutant embryos expressing a reverse-structured chimera (EcNc) show trophectoderm survival and blastocoel cavitation, indicating a crucial and non-substitutable role of the E-cadherin ectodomain for these processes. Strikingly, blastocyst formation can be rescued in homozygous NcEc embryos by restoring Igf1r signaling, which enhances cell survival. Hence, perturbation of E-cadherin extracellular integrity, independent of its cell-adhesion function, blocked Igf1r signaling and induced cell death in the trophectoderm. Our results reveal an important and yet undiscovered function of Igf1r during preimplantation development mediated by a unique physical interaction between Igf1r and E-cadherin indispensable for proper receptor activation and anti-apoptotic signaling. We provide novel insights into how ligand-dependent Igf1r activity is additionally gated to sense developmental potential in utero and into a bifunctional role of adhesion molecules in contact formation and signaling.