We have shown previously that the heavy metal-responsive transcriptional activator MTF-1 regulates the basal and heavy metal-induced expression of metallothioneins. To investigate the physiological function of MTF-1, we generated null mutant mice by targeted gene disruption. Embryos lacking MTF-1 die in utero at approximately day 14 of gestation. They show impaired development of hepatocytes and, at later stages, liver decay and generalized edema. MTF-1(-/-) embryos fail to transcribe metallothionein I and II genes, and also show diminished transcripts of the gene which encodes the heavy-chain subunit of the gamma-glutamylcysteine synthetase, a key enzyme for glutathione biosynthesis. Metallothionein and glutathione are involved in heavy metal homeostasis and detoxification processes, such as scavenging reactive oxygen intermediates. Accordingly, primary mouse embryo fibroblasts lacking MTF-1 show increased susceptibility to the cytotoxic effects of cadmium or hydrogen peroxide. Thus, MTF-1 may help to control metal homeostasis and probably cellular redox state, especially during liver development. We also note that the MTF-1 null mutant phenotype bears some similarity to those of two other regulators of cellular stress response, namely c-Jun and NF-kappaB (p65/RelA).