In mammals, the first branchial arch (BA1) develops into a number of craniofacial skeletal elements including the jaws and teeth. Outgrowth and patterning of BA1 during early embryogenesis is thought to be controlled by signals from its covering ectoderm. Here we used Cre/loxP technology to inactivate the mouse Fgf8 gene in this ectoderm and have obtained genetic evidence that FGF8 has a dual function in BA1: it promotes mesenchymal cell survival and induces a developmental program required for BA1 morphogenesis. Newborn mutants lack most BA1-derived structures except those that develop from the distal-most region of BA1, including lower incisors. The data suggest that the BA1 primordium is specified into a large proximal region that is controlled by FGF8, and a small distal region that depends on other signaling molecules for its outgrowth and patterning. Because the mutant mice resemble humans with first arch syndromes that include agnathia, our results raise the possibility that some of these syndromes are caused by mutations that affect FGF8 signaling in BA1 ectoderm.