The ultimobranchial body (UBB) and thyroid primordium are the origins of the thyroid gland that fuse around embryonic day 14.5 of mouse gestation, ultimately giving rise to calcitonin-producing C cells and thyroglobulin-producing follicular cells, respectively. A homeodomain transcription factor NKX2-1 is expressed both in the UBB and the thyroid primordium, and is critical for development of the thyroid gland. In this study, the role of p63 in development of UBB and the thyroid gland was analyzed by histological, immunohistochemical, and electron microscopic analyses using mice with various combinations of Nkx2-1 and p63 wild-type, heterozygous, and null alleles. In the absence of p63, a normal thyroid gland develops, as revealed by expression of thyroglobulin and calcitonin, thus showing that p63 is not required for thyroid development. However, in mice carrying the Nkx2-1-null allele, the UBB remains as a cystic vesicular structure and/or in nested patterns consisting of p63-positive cells surrounding the vesicle and undifferentiated immature cells with occasional cilia lying inside. The cystic UBB was present even in the Nkx2-1;p63 double-null mice. The structure and p63 expression pattern of the UBB cyst strikingly resemble the solid cell nest. These results show that in the absence of NKX2-1, UBB becomes cystic independent of p63, which is likely the origin of SCN.