The COUP-TFs are orphan members of the steroid/thyroid hormone receptor superfamily. Multiple COUP-TF members have been cloned and they share a high degree of sequence homology between species as divergent as Drosophila and humans, suggesting a conservation of function through evolution. The COUP-TFs are highly expressed in the developing nervous systems of several species examined, indicating their possible involvement in neuronal development and differentiation. In the mouse, there are two very homologous COUP-TF genes (I and II) and their expression patterns overlap extensively. To study the physiological function of mCOUP-TFI, a gene-targeting approach was undertaken. We report here that mCOUP-TFI null animals die perinataly. Mutant embryos display an altered morphogenesis of the ninth cranial ganglion and nerve. The aberrant formation of the ninth ganglion is most possibly attributable to extra cell death in the neuronal precursor cell population. In addition, at midgestation, aberrant nerve projection and arborization were oberved in several other regions of mutant embryos. These results indicate that mCOUP-TFI is required for proper fetal development and is essential for postnatal development. Furthermore, mCOUP-TFI possesses vital physiological functions that are distinct from mCOUP-TFII despite of their high degree of homology and extensive overlapping expression patterns.