Human embryogenesis entails complex signalling interactions between embryonic and extra-embryonic cells. However, how extra-embryonic cells direct morphogenesis within the human embryo remains largely unknown due to a lack of relevant stem cell models. Here, we have established conditions to differentiate human pluripotent stem cells (hPSCs) into yolk sac-like cells (YSLCs) that resemble the post-implantation human hypoblast molecularly and functionally. YSLCs induce the expression of pluripotency and anterior ectoderm markers in human embryonic stem cells (hESCs) at the expense of mesoderm and endoderm markers. This activity is mediated by the release of BMP and WNT signalling pathway inhibitors, and, therefore, resembles the functioning of the anterior visceral endoderm signalling centre of the mouse embryo, which establishes the anterior-posterior axis. Our results implicate the yolk sac in epiblast cell fate specification in the human embryo and propose YSLCs as a tool for studying post-implantation human embryo development in vitro.