Congenital diaphragmatic hernia (CDH) is a significant cause of pediatric mortality in humans with a heterogeneous and poorly understood etiology. Here we show that mice lacking Slit3 developed a central (septum transversum) CDH. Slit3 encodes a member of the Slit family of guidance molecules and is expressed predominantly in the mesothelium of the diaphragm during embryonic development. In Slit3 null mice, the central tendon region of the diaphragm fails to separate from liver tissue because of abnormalities in morphogenesis. The CDH progresses through continuous growth of the liver into the thoracic cavity. This study establishes the first genetic model for CDH and identifies a previously unsuspected role for Slit3 in regulating the development of the diaphragm.