More than blood (Mtb) is a novel gene that is widely expressed in mouse embryos prior to gastrulation but is subsequently restricted to specific tissues, including the developing central nervous system and hematopoietic organs. Since MTB is highly expressed in the fetal liver and developing thymus, we predicted that MTB would be required for hematopoiesis and that embryos deficient in MTB would die of anemia. Surprisingly, embryos with a targeted disruption of Mtb died prior to the initiation of blood cell development, immediately following implantation. This lethality is due to a defect in expansion of the inner cell mass (ICM), as Mtb(-/-) blastocysts failed to exhibit outgrowth of the ICM, both in vitro and in vivo. Furthermore, Mtb(-/-) blastocysts exhibited a higher frequency of apoptotic cells than wild-type or heterozygous blastocysts. These findings demonstrate that Mtb is a novel gene that is essential for early embryonic development.