The transforming growth factor-beta (TGF-beta) superfamily encompasses a large group of structurally related polypeptides that are capable of regulating cell growth and differentiation in a wide range of embryonic and adult tissues. Growth/differentiation factor-1 (Gdf-1, encoded by Gdf1) is a TGF-beta family member of unknown function that was originally isolated from an early mouse embryo cDNA library and is expressed specifically in the nervous systemin late-stage embryos and adult mice. Here we show that at early stages of mouse development, Gdfl is expressed initially throughout the embryo proper and then most prominently in the primitive node, ventral neural tube, and intermediate and lateral plate mesoderm. To examine its biological function, we generated a mouse line carrying a targeted mutation in Gdf1. Gdf1-/- mice exhibited a spectrum of defects related to left-right axis formation, including visceral situs inversus, right pulmonary isomerism and a range of cardiac anomalies. In most Gdf1-/- embryos, the expression of Ebaf (formerly lefty-1) in the left side of the floor plate and Leftb (formerly lefty-2), nodal and Pitx2 in the left lateral plate mesoderm was absent, suggesting that Gdf1 acts upstream of these genes either directly or indirectly to activate their expression. Our findings suggest that Gdf1 acts early in the pathway of gene activation that leads to the establishment of left-right asymmetry.