Targeted disruption of the homeobox gene T/ebp (Ttf1) in mice results in ablation of the thyroid and pituitary, and severe deformities in development of the lung and hypothalamus. T/ebp is expressed in the thyroid, lung, and ventral forebrain during normal embryogenesis. Examination of thyroid development in T/ebp homozygous null mutant embryos revealed that the thyroid rudiment is initially formed but is eliminated through apoptosis. Absence of T/EBP expression in the lung primordium does not activate apoptosis since a lung tissue, albeit dysmorphic, is nevertheless formed in T/ebp-/- embryos. These results demonstrate that T/EBP is not required for the initial specification of thyroid or lung primordia, but is absolutely essential for the development and morphogenesis of these organs.