The sea urchin embryo is emerging as an attractive model to study morphogenetic processes such as directed migration of mesenchyme cells and cell sheet invagination, but surprisingly, few of the genes regulating these processes have yet been characterized. We present evidence that FGFA, the first FGF family member characterized in the sea urchin, regulates directed migration of mesenchyme cells, morphogenesis of the skeleton and gastrulation during early development. We found that at blastula stages, FGFA and a novel putative FGF receptor are expressed in a pattern that prefigures morphogenesis of the skeletogenic mesoderm and that suggests that FGFA is one of the elusive signals that guide migration of primary mesenchyme cells (PMCs). We first show that fgfA expression is correlated with abnormal migration and patterning of the PMCs following treatments that perturb specification of the ectoderm along the oral-aboral and animal-vegetal axes. Specification of the ectoderm initiated by Nodal is required to restrict fgfA to the lateral ectoderm, and in the absence of Nodal, fgfA is expressed ectopically throughout most of the ectoderm. Inhibition of either FGFA, FGFR1 or FGFR2 function severely affects morphogenesis of the skeleton. Furthermore, inhibition of FGFA and FGFR1 signaling dramatically delays invagination of the archenteron, prevents regionalization of the gut and abrogates formation of the stomodeum. We identified several genes acting downstream of fgfA in these processes, including the transcription factors pea3 and pax2/5/8 and the signaling molecule sprouty in the lateral ectoderm and SM30 and SM50 in the primary mesenchyme cells. This study identifies the FGF signaling pathway as an essential regulator of gastrulation and directed cell migration in the sea urchin embryo and as a key player in the gene regulatory network directing morphogenesis of the skeleton.