Lpp3, formerly known as Pap2b, is a lipid phosphohydrolase enzyme. Some of its substrates and products are lipids with potent biological and signaling activities such as phosphatidic acid, lysophosphatidic acid, sphingosine-1-phosphate, diacylglycerol, sphingosine, and ceramide. Lpp3 is dynamically expressed during development and is widely distributed in adult tissues. Targeted inactivation of Lpp3 gene (Ppap2b) in the mouse results in embryonic lethality because of defects in extraembryonic vascular development and gastrulation. To study the participation of Lpp3 later in development and in specific cell lineages we generated a conditional allele of Ppap2b. This was accomplished by flanking critical exons, responsible for its catalytic activity with loxP sites. A generalized Cre-mediated recombination of this allele yielded a phenotype fundamentally identical to our previously reported Ppap2b null allele.