It has been thought that early inner cell mass (ICM) is a homogeneous population and that cell position in the ICM leads to the formation of two lineages, epiblast (EPI) and primitive endoderm (PE), by E4.5. Here, however, we show that the ICM at E3.5 is already heterogeneous. The EPI- and PE-specific transcription factors, Nanog and Gata6, were expressed in the ICM in a random "salt and pepper" pattern, as early as E3.5, in a mutually exclusive manner. Lineage tracing showed predominant lineage restriction of single ICM cells at E3.5 to either lineage. In embryos lacking Grb2 where no PE forms, Gata6 expression was lost and all ICM cells were Nanog positive. We propose a model in which the ICM develops as a mosaic of EPI and PE progenitors at E3.5, dependent on Grb2-Ras-MAP kinase signaling, followed by later segregation of the progenitors into the appropriate cell layers.