Arabidopsis thaliana seed development requires the concomitant development of two zygotic compartments, the embryo and the endosperm. Following fertilization, the endosperm expands and the embryo grows invasively through the endosperm, which breaks down. Here, we describe a structure we refer to as the embryo sheath that forms on the surface of the embryo as it starts to elongate. The sheath is deposited outside the embryonic cuticle and incorporates endosperm-derived material rich in extensin-like molecules. Sheath production is dependent upon the activity of ZHOUPI, an endosperm-specific transcription factor necessary for endosperm degradation, embryo growth, embryo-endosperm separation, and normal embryo cuticle formation. We show that the peptide KERBEROS, whose expression is ZHOUPI dependent, is necessary both for the formation of a normal embryo sheath and for embryo-endosperm separation. Finally, we show that the receptor-like kinases GSO1 and GSO2 are required for sheath deposition at the embryo surface but not for production of sheath material in the endosperm. We present a model in which sheath formation depends on the coordinated production of material in the endosperm and signaling within the embryo, highlighting the complex molecular interaction between these two tissues during early seed development.