During vertebrate embryogenesis, the newly formed mesoderm is allocated to the paraxial, intermediate, and lateral domains, each giving rise to different cell and tissue types. Here, we provide evidence that the forkhead genes, Foxc1 and Foxc2, play a role in the specification of mesoderm to paraxial versus intermediate fates. Mouse embryos lacking both Foxc1 and Foxc2 show expansion of intermediate mesoderm markers into the paraxial domain, lateralization of somite patterning, and ectopic and disorganized mesonephric tubules. In gain of function studies in the chick embryo, Foxc1 and Foxc2 negatively regulate intermediate mesoderm formation. By contrast, their misexpression in the prospective intermediate mesoderm appears to drive cells to acquire paraxial fate, as revealed by expression of the somite markers Pax7 and Paraxis. Taken together, the data indicate that Foxc1 and Foxc2 regulate the establishment of paraxial versus intermediate mesoderm cell fates in the vertebrate embryo.