Mouse embryos lacking Gsc and Dkk1 function display severe deficiencies in craniofacial structures which are not found in either Dkk1 homozygous null or Gsc homozygous null mutant embryos. Loss of Gsc has a dosage-related effect on the severity of head truncation phenotype in Dkk1 heterozygous embryos. The synergistic effect of these mutations in enhancing head truncation provides direct evidence of a genetic interaction between Gsc and Dkk1, which display overlapping expression in the prechordal mesoderm. In the absence of Gsc activity, the expression of Dkk1, WNT genes and a transgenic reporter for WNT signalling are altered. Our results show that Gsc and Dkk1 functions are non-redundant in the anterior mesendoderm for normal anterior development and Gsc may influence Wnt signalling as a negative regulator.