Integrin-mediated cell-matrix interactions are essential for development, tissue homeostasis, and repair. Upon ligand binding, integrins are recruited into focal adhesions (FAs). Integrin-linked kinase (ILK) is an FA component that interacts with the cytoplasmic domains of integrins, recruits adaptor proteins that link integrins to the actin cytoskeleton, and phosphorylates the serine/threonine kinases PKB/Akt and GSK-3beta. Here we show that mice lacking ILK expression die at the peri-implantation stage because they fail to polarize their epiblast and to cavitate. The impaired epiblast polarization is associated with abnormal F-actin accumulation at sites of integrin attachments to the basement membrane (BM) zone. Likewise, ILK-deficient fibroblasts showed abnormal F-actin aggregates associated with impaired cell spreading and delayed formation of stress fibers and FAs. Finally, ILK-deficient fibroblasts have diminished proliferation rates. However, insulin or PDGF treatment did not impair phosphorylation of PKB/Akt and GSK-3beta, indicating that the proliferation defect is not due to absent or reduced ILK-mediated phosphorylation of these substrates in vivo. Furthermore, expression of a mutant ILK lacking kinase activity and/or paxillin binding in ILK-deficient fibroblasts can rescue cell spreading, F-actin organization, FA formation, and proliferation. Altogether these data show that mammalian ILK modulates actin rearrangements at integrin-adhesion sites.