Hypoblast formation in Sminthopsis macroura starts in blastocysts with a size between 1.0 and 1.4 mm, in which cells appear to be similar to each other, and finishes at the complete 2.6- or 2.7-mm bilaminar blastocyst, which is fully lined with hypoblast cells. When hypoblast cells begin allocation, the pluriblast region progressively differentiates from the trophoblast. Some pluriblast cells, which are otherwise undistinguished, lying on one side near the boundary of the circular pluriblast, move to the inside as hypoblast cells by mitosis or migration. They initially line the pluriblast and then the trophoblast. Hypoblast cells continue to leave the pluriblast/epiblast and intercalate into the underlying hypoblast layer until the advanced stages of bilaminar blastocysts. Associated with the origin of the hypoblast cells, the residual surface epiblast cells become less flatted and more cuboidal or rounded in shape. Characteristics are increased density of ribosomes, granular endoplasmic reticulum and a marked apical-basal polarity related to apical microvilli and endocytosis and more vesicles with flocculent content and a loss of the crystalloid deposits that were typical for earlier stages. Trophoblast cells become flat and elongated with only few vesicles, and they transform into extra-embryonic ectoderm cells, which are broader, rather square and with a higher density of ribosomes. Hypoblast cells are characterized by a relatively high level of ribosomes and endoplasmic reticulum, fewer small vesicles and no noticeable endocytotic processes and initially form a reticulum because the cells preferentially migrate along cell-cell boundaries by extension of long filopodia. Once hypoblast cells reach the boundary of the embryonic area and extend to line the trophoblast, they progressively consolidate into a squamous epithelium. It is suggested that the origin of the hypoblast from one side of the pluriblast and its invasion under the trophoblast from proliferating centres at the edge of the embryonic area provide mechanisms for patterning epiblast, hypoblast, trophoblast and extra-embryonic ectoderm.