NIPP1 (nuclear inhibitor of protein phosphatase 1) is a ubiquitously expressed nuclear scaffold protein that has been implicated in both transcription and RNA processing. Among its protein ligands are a protein kinase, a protein phosphatase, two splicing factors, and a transcriptional regulator, and the binding of these proteins to NIPP1 is tightly regulated by phosphorylation. To study the function of NIPP1 in vivo, we have used homologous recombination to generate mice that are deficient in NIPP1. NIPP1(-/+) mice developed normally. However, NIPP1(-/-) embryos showed severely retarded growth at embryonic day 6.5 (E6.5) and were resorbed by E8.5. This early embryonic lethality was not associated with increased apoptosis but correlated with impaired cell proliferation. Blastocyst outgrowth experiments and the RNA interference-mediated knockdown of NIPP1 in cultured cells also revealed an essential role for NIPP1 in cell proliferation. In further agreement with this function, no viable NIPP1(-/-) cell lines were obtained by derivation of embryonic stem (ES) cells from blastocysts of NIPP1(-/+) intercrosses or by forced homogenotization of heterozygous ES cells at high concentrations of Geneticin. We conclude that NIPP1 is indispensable for early embryonic development and cell proliferation.