smad genes constitute a family of nine members whose products serve as intracellular mediators of transforming growth factor beta signals. SMAD2, which is a tumor suppressor involved in colorectal and lung cancer, has been shown to induce dorsal mesoderm in Xenopus laevis in response to transforming growth factor beta and activins. The smad2 gene is expressed ubiquitously during murine embryogenesis and in many adult mouse tissues. Animals that lacked smad2 died before 8.5 days of development (E8.5). E6.5 homozygous mutants were smaller than controls, lacked the extraembryonic portion of the egg cylinder, and appeared strikingly similar to E6.5 smad4 mutants. This similarity was no longer evident at E7.5, however, because the smad2 mutants contained embryonic ectoderm within their interiors. Molecular analysis showed that smad2 mutant embryos did not undergo gastrulation or make mesoderm. The results demonstrate that smad2 is required for egg cylinder elongation, gastrulation, and mesoderm induction.