ActRIB is a type I transmembrane serine/threonine kinase receptor that has been shown to form heteromeric complexes with the type II activin receptors to mediate activin signal. To investigate the function of ActRIB in mammalian development, we generated ActRIB-deficient ES cell lines and mice by gene targeting. Analysis of the ActRIB-/- embryos showed that the epiblast and the extraembryonic ectoderm were disorganized, resulting in disruption and developmental arrest of the egg cylinder before gastrulation. To assess the function of ActRIB in mesoderm formation and gastrulation, chimera analysis was conducted. We found that ActRIB-/- ES cells injected into wild-type blastocysts were able to contribute to the mesoderm in chimeric embryos, suggesting that ActRIB is not required for mesoderm formation. Primitive streak formation, however, was impaired in chimeras when ActRIB-/- cells contributed highly to the epiblast. Further, chimeras generated by injection of wild-type ES cells into ActRIB-/- blastocysts formed relatively normal extraembryonic tissues, but the embryo proper developed poorly probably resulting from severe gastrulation defect. These results provide genetic evidence that ActRIB functions in both epiblast and extraembryonic cells to mediate signals that are required for egg cylinder organization and gastrulation.