YAP is a multifunctional adapter protein and transcriptional coactivator with several binding partners well described in vitro and in cell culture. To explore in vivo requirements for YAP, we generated mice carrying a targeted disruption of the Yap gene. Homozygosity for the Yap(tm1Smil) allele (Yap-/-) caused developmental arrest around E8.5. Phenotypic characterization revealed a requirement for YAP in yolk sac vasculogenesis. Yolk sac endothelial and erythrocyte precursors were specified as shown by histology, PECAM1 immunostaining, and alpha globin expression. Nonetheless, development of an organized yolk sac vascular plexus failed in Yap-/- embryos. In striking contrast, vasculogenesis proceeded in both the allantois and the embryo proper. Mutant embryos showed patterned gene expression domains along the anteroposterior neuraxis, midline, and streak/tailbud. Despite this evidence of proper patterning and tissue specification, Yap-/- embryos showed developmental perturbations that included a notably shortened body axis, convoluted anterior neuroepithelium, caudal dysgenesis, and failure of chorioallantoic fusion. These results reveal a vital requirement for YAP in the developmental processes of yolk sac vasculogenesis, chorioallantoic attachment, and embryonic axis elongation.