Nuclease sensitive element binding protein 1 (NSEP1) is a member of the EFIA/NSEP1/YB-1 family of DNA-binding proteins whose members share a cold shock domain; it has also been termed DNA-binding protein B and Y box binding protein-1 because of its recognition of transcriptional regulatory elements. In addition, NSEP1 functions in the translational regulation of renin, ferritin, and interleukin 2 transcripts, and our laboratory has reported that it plays a role in the biosynthesis of selenium-containing proteins. To test the functional importance of NSEP1 in murine embryonic development, we have utilized a clone of ES cells in which the NSEP1 gene had been disrupted by integration of a plasmid gene-trapping vector into the seventh exon. Injection of these cells into C57BL/6 blastocysts resulted in 11 high percentage chimeric mice; crosses to wild type C57BL/6 mice generated 82 F1 agouti mice, indicating germ line transmission of the ES cell clone, but genotyping showed no evidence of the disrupted allele in any of these agouti offspring even though spermatozoa from four of five tested mice contained the targeted allele. Embryos harvested after timed matings of chimeric male mice demonstrated only the wildtype allele in 27 embryos tested at E7.5, E12.5, and E18.5. These results suggest that gene targeting of NSEP1 induces a lethal phenotype in early embryos, due to either haploinsufficiency of NSEP1 or formation of a dominant negative form of the protein. In either case, these data indicate the functional importance of the NSEP1 gene in murine early embryonic development.