Mycolic acids are vital components of the Mycobacterium tuberculosis cell wall and are essential for survival. While most components of the fatty acid synthase-II (FAS-II) enzymic machinery that synthesizes these long chain alpha-alkyl, beta-hydroxy fatty acids have been identified, the gene encoding the beta-hydroxyacyl-acyl carrier protein (ACP) dehydratase activity has remained elusive. Recent bioinformatics-based studies and drug inhibition experiments have identified the M. tuberculosis gene Rv0636 as a promising candidate for this role. Using a recently described, specialized transduction-based genetic tool we now demonstrate that MSMEG1341, the Mycobacterium smegmatis homologue of Rv0636, is an essential gene; null mutants of the gene could only be generated in a merodiploid strain which contained a second integrated acetamide-inducible copy of MSMEG1341. Growth of the conditional mutant in the absence of acetamide resulted in loss of mycolic acid biosynthesis and eventually loss of viability due to cell lysis. Null MSMEG1341 mutants could also be generated in a M. smegmatis strain containing an integrated copy of Rv0636, indicating that Rv0636 was the functional counterpart of MSMEG1341 in M. tuberculosis. Our results demonstrate that MSMEG1341 is an essential gene involved in mycolic acid biosynthesis and encodes the FAS-II beta-hydroxyacyl-ACP dehydratase.