The N-myc gene encodes a putative transcription factor that is thought to function in the regulation of gene expression during cell differentiation and/or growth. To examine the role of N-myc during development, we have used targeted mutagenesis in embryonic stem cells to produce a mouse line that carries an N-myc null allele. Mice homozygous for the mutation died between 10.5 and 12.5 days of gestation. Histological analysis of mutant embryos revealed that organs and tissues expected at these stages of development were present. However, multiple defects were observed, primarily in tissues and organs that normally express N-myc. In particular, mutant hearts were underdeveloped, often retaining the S-shape more typical of 9-day-old embryos. In addition, cranial and spinal ganglia were reduced in size and/or cellularity. Most of the noted defects were more consistent with a role of N-myc in proliferation of precursor populations than with a block in differentiation per se, at least at these early stages. These results demonstrate that N-myc plays an essential role during development and clearly confirm that N-myc has a physiological function that is distinct from that of the other myc-family genes.