Ovol1 encodes a zinc finger transcriptional repressor that is downstream of the LEF1/beta-catenin complex, nuclear effectors of canonical Wnt signaling. Previous gene knockout studies performed in a 129SvxC57BL/6 mixed genetic background revealed that Ovol1-deficient mice survive to adulthood but display multiple tissue defects. In this study, we describe a C57BL/6 strain-specific reduction in perinatal survival of Ovol1 mutant mice. The perinatal lethality is accompanied by kidney epithelial cysts of embryonic onset and delayed skin barrier acquisition. Genetic analysis suggests a partial functional compensation by Ovol2 for the loss of Ovol1. The expression of Ovol2 was up-regulated in Ovol1-deficient epidermis, and Ovol1 represses the activity of Ovol2 promoter in a DNA binding-dependent manner. Collectively, these studies uncover novel functions of Ovol1 in mouse development and identify Ovol2 as a downstream target of Ovol1.