Fibroblast growth factor (FGF)-dependent epithelial-mesenchymal transitions and cell migration contribute to the establishment of germ layers in vertebrates and other animals, but a comprehensive demonstration of the cellular activities that FGF controls to mediate these events has not been provided for any system. The establishment of the Drosophila mesoderm layer from an epithelial primordium involves a transition to a mesenchymal state and the dispersal of cells away from the site of internalisation in a FGF-dependent fashion. We show here that FGF plays multiple roles at successive stages of mesoderm morphogenesis in Drosophila. It is first required for the mesoderm primordium to lose its epithelial polarity. An intimate, FGF-dependent contact is established and maintained between the germ layers through mesoderm cell protrusions. These protrusions extend deep into the underlying ectoderm epithelium and are associated with high levels of E-cadherin at the germ layer interface. Finally, FGF directs distinct hitherto unrecognised and partially redundant protrusive behaviours during later mesoderm spreading. Cells first move radially towards the ectoderm, and then switch to a dorsally directed movement across its surface. We show that both movements are important for layer formation and present evidence suggesting that they are controlled by genetically distinct mechanisms.