The differentiation and patterning of murine early embryos are sustained by the visceral endoderm, an epithelial layer of polarised cells that has critical roles in multiple signalling pathways and nutrient uptake. Both nutritional and signalling functions rely upon the endocytosis of various molecules from the cell surface via the endocytic pathway. However, endocytic membrane dynamics in this embryonic tissue remain poorly understood. Here we show that the functions of rab7, a small GTP-binding protein regulating the late endocytic pathway, are essential for embryonic patterning during gastrulation. The endosomes of visceral endoderm cells are delivered via a unique microautophagy-like process to the apical vacuole, a large compartment exhibiting lysosomal characteristics. Loss of rab7 function results in severe inhibition of this endocytic pathway. Our results indicate that the microautophagic process and flow of the endocytic membrane have essential roles in early embryonic development.