Cell migration and cell rearrangements are critical for establishment of the body plan of vertebrate embryos. The first step in organization of the body plan of the mouse embryo, specification of the anterior-posterior body axis, depends on migration of the anterior visceral endoderm from the distal tip of the embryo to a more proximal region overlying the future head. The anterior visceral endoderm (AVE) is a cluster of extra-embryonic cells that secretes inhibitors of the Wnt and Nodal pathways to inhibit posterior development. Because Rac proteins are crucial regulators of cell migration and mouse Rac1 mutants die early in development, we tested whether Rac1 plays a role in AVE migration. Here we show that Rac1 mutant embryos fail to specify an anterior-posterior axis and, instead, express posterior markers in a ring around the embryonic circumference. Cells that express the molecular markers of the AVE are properly specified in Rac1 mutants but remain at the distal tip of the embryo at the time when migration should take place. Using tissue specific deletions, we show that Rac1 acts autonomously within the visceral endoderm to promote cell migration. High-resolution imaging shows that the leading wild-type AVE cells extend long lamellar protrusions that span several cell diameters and are polarized in the direction of cell movement. These projections are tipped by filopodia-like structures that appear to sample the environment. Wild-type AVE cells display hallmarks of collective cell migration: they retain tight and adherens junctions as they migrate and exchange neighbors within the plane of the visceral endoderm epithelium. Analysis of mutant embryos shows that Rac1 is not required for intercellular signaling, survival, proliferation, or adhesion in the visceral endoderm but is necessary for the ability of visceral endoderm cells to extend projections, change shape, and exchange neighbors. The data show that Rac1-mediated epithelial migration of the AVE is a crucial step in the establishment of the mammalian body plan and suggest that Rac1 is essential for collective migration in mammalian tissues.