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The three fibronectin leucine-rich repeat transmembrane (FLRT) proteins contain 10 leucine-rich repeats (LRR), a type III fibronectin (FN) domain, followed by the transmembrane region, and a short cytoplasmic tail. XFLRT3, a Nodal/TGFβ target, regulates cell adhesion and modulates FGF signalling during Xenopus gastrulation. The present study describes the onset and pattern of FLRT1–3 expression in the early mouse embryo. FLRT3 expression is activated in the anterior visceral endoderm (AVE), and during gastrulation appears in anterior streak derivatives namely the node, notochord and the emerging definitive endoderm. To explore FLRT3 function we generated a null allele via gene targeting. Early Nodal activities required for anterior–posterior (A–P) patterning, primitive streak formation and left–right (L–R) axis determination were unperturbed. However, FLRT3 mutant embryos display defects in headfold fusion, definitive endoderm migration and a failure of the lateral edges of the ventral body wall to fuse, leading to cardia bifida. Surprisingly, the mutation has no effect on FGF signalling. Collectively these experiments demonstrate that FLRT3 plays a key role in controlling cell adhesion and tissue morphogenesis in the developing mouse embryo.