Development is often coordinated by biologically active mobile compounds that move between cells or organs. Arabidopsis mutants with defects in the BYPASS1 (BPS1) gene overproduce an active mobile compound that moves from the root to the shoot and inhibits growth. Here, we describe two related Arabidopsis genes, BPS2 and BPS3. Analyses of single, double and triple mutants revealed that all three genes regulate production of the same mobile compound, the bps signal, with BPS1 having the largest role. The triple mutant had a severe embryo defect, including the failure to properly establish provascular tissue, the shoot meristem and the root meristem. Aberrant expression of PINFORMED1, DR5, PLETHORA1, PLETHORA2 and WUSCHEL-LIKE HOMEOBOX5 were found in heart-stage bps triple-mutant embryos. However, auxin-induced gene expression, and localization of the PIN1 auxin efflux transporter, were intact in bps1 mutants, suggesting that the primary target of the bps signal is independent of auxin response. Thus, the bps signal identifies a novel signaling pathway that regulates patterning and growth in parallel with auxin signaling, in multiple tissues and at multiple developmental stages.