Glycogen storage disease type IV (GSD-IV) is an autosomal recessive disease caused by a deficiency in glycogen-branching enzyme (GBE1) activity that results in the accumulation of amylopectin-like polysaccharide, which presumably leads to osmotic swelling and cell death. This disease is extremely heterogeneous in terms of tissue involvement, age of onset and clinical manifestation. The most severe fetal form presents as hydrops fetalis; however, its pathogenetic mechanisms are largely unknown. In this study, mice carrying a stop codon mutation (E609X) in the Gbe1 gene were generated using a gene-driven mutagenesis approach. Homozygous mutants (Gbe(-/-) mice) recapitulated the clinical features of hydrops fetalis and the embryonic lethality of the severe fetal form of GSD-IV. However, contrary to conventional expectations, little amylopectin accumulation and no cell degeneration were found in Gbe(-/-) embryonic tissues. Glycogen accumulation was reduced in developing hearts of Gbe(-/-)embryos, and abnormal cardiac development, including hypertrabeculation and noncompaction of the ventricular wall, was observed. Further, Gbe1 ablation led to poor ventricular function in late gestation and ultimately caused heart failure, fetal hydrops and embryonic lethality. We also found that the cell-cycle regulators cyclin D1 and c-Myc were highly expressed in cardiomyocytes and likely contributed to cardiomyocyte proliferation and trabeculation/compaction of the ventricular wall. Our results reveal that early molecular events associated with Gbe1 deficiency contribute to abnormal cardiac development and fetal hydrops in the fetal form of GSD-IV.