In preimplantation mouse embryos, the first lineage differentiation takes place in the 8- to 16-cell-stage embryo and results in formation of the trophectoderm (TE) and inner cell mass (ICM), which will give rise to the trophoblast of the placenta and the embryo proper, respectively. Although, it is widely accepted that positioning of a cell within the embryo influences lineage differentiation, the mechanism underlying differential lineage differentiation and how it involves cell position are largely unknown. Interestingly, novel cues from the Hippo pathway have been recently demonstrated in the preimplantation mouse embryo. Unlike the mechanisms reported from epithelium-cultured cells, the Hippo pathway was found to be responsible for translating positional information to lineage specification through a position-sensing mechanism. Disruption of Hippo pathway-component genes in early embryos results in failure of lineage specification and failure of postimplantation development. In this review, we discuss the unique role of the Hippo signaling pathway in early embryo development and its role in lineage specification. Understanding the activity and regulation of the Hippo pathway may offer new insights into other areas of developmental biology that evolve from understanding of this cell-fate specification in the early embryonic cell.