The developmental potency of cells in the proximal and distal regions of the epiblast of pre- and early-primitive-streak-stage mouse embryos was assessed by their differentiation in the host embryo following orthotopic and heterotopic cell transplantation. Normally, cells in the distal epiblast differentiate predominantly into neuroectoderm and surface ectoderm. However, when they were transplanted to proximal regions of the epiblast, distal epiblast cells behaved like proximal epiblast cells: they colonised the extraembryonic mesoderm and other mesodermal tissues in the posterior region of the host embryo. In addition, about 3.7% of the transplanted distal epiblast cells differentiated into primordial germ cells. This proportion is comparable to the 3.9% of orthotopically transplanted proximal epiblast cells that became primordial germ cells. When proximal epiblast cells were transplanted heterotopically to distal sites, their descendants were generally absent from the extraembryonic mesoderm and the germ cell population of the host embryo. Like cells in the distal epiblast, they mostly colonised the neural plate and surface ectoderm. This plasticity of cell fate suggests that the epiblast cells are not irreversibly allocated to any specific lineages, including the germ line. The adoption of developmental fate that is typical of the cell population at the site of transplantation suggests that the specification of cell lineages is subject to certain site-specific influences in the epiblast. Allocation of cells to the ectodermal and germ cell lineages may be subject to local tissue interactions and the restriction of morphogenetic tissue movement of different epiblast cell populations during gastrulation.