The Pik3c3 gene encodes an 887 amino acid lipid kinase, phosphoinositide-3-kinase class 3 (PIK3C3). PIK3C3 is known to regulate various intracellular membrane trafficking events. However, little is known about its functions during early embryogenesis in mammals. To investigate the function of PIK3C3 in vivo, we generated Pik3c3 null mice. We show here that Pik3c3 heterozygous are normal and fertile. In contrast, Pik3c3 homozygous mutants are embryonic lethal and die between E7.5 and E8.5 of embryogenesis. Mutant embryos are poorly developed with no evidence of mesoderm formation, and suffer from severely reduced cell proliferations. Cell proliferation defect is also evident in vitro, where mutant blastocysts in culture fail to give rise to typical colonies formed by inner cell mass. Electron microscopic analysis revealed that epiblast cells in mutant embryos appear normal, whereas the visceral endoderm cells contain larger vesicles inside the lipid droplets. Finally, we provide evidence that mTOR signaling is drastically reduced in Pik3c3 null embryos, which could be a major contributor to the observed proliferation and embryogenesis defects.