Mutations in the SMAD4/DPC4 tumor suppressor gene, a key signal transducer in most TGFβ-related pathways, are involved in 50% of pancreatic cancers. Homozygous Smad4 mutant mice die before day 7.5 of embryogenesis. Mutant embryos have reduced size, fail to gastrulate or express a mesodermal marker, and show abnormal visceral endoderm development. Growth retardation of theSmad4-deficient embryos results from reduced cell proliferation rather than increased apoptosis. Aggregation of mutant Smad4 ES cells with wild-type tetraploid morulae rescues the gastrulation defect. These results indicate that Smad4 is initially required for the differentiation of the visceral endoderm and that the gastrulation defect in the epiblast is secondary and non-cell autonomous. Rescued embryos show severe anterior truncations, indicating a second important role for Smad4 in anterior patterning during embryogenesis.