Tnrc6 family members (Tnrc6a/b/c) are key components of the RNA-induced silencing complex in microRNA (miRNA)-mediated gene suppression. Here, we show that Tnrc6a, also known as GW182, is selectively expressed in the yolk sac endoderm and that gene trap disruption of GW182 leads to growth arrest and apoptosis. We found that targets of miRNAs highly expressed in the yolk sac are significantly derepressed in GW182(gt/gt) mutant mice, although levels of miRNAs are not altered. Specifically, growth arrest and apoptosis phenotype are associated with significant derepression of Cdkn1a (p21), Cdkn1c (P27), Lats1, Lats2, Rb1, Rbl, Bim, and Pten, known targets of miRNAs from miR-17/20/93/106 clusters highly expressed in yolk sac endoderm. Together, these data strongly suggest that GW182 is an essential functional component in the RNA-induced silencing complex for miRNA-mediated gene silencing in vivo, and selectively regulation of miRNA activity plays an important role in the proper development of yolk sac.