Holoprosencephaly is a common developmental disorder in humans characterised by incomplete brain hemisphere separation and midface anomalies. The etiology of holoprosencephaly is heterogeneous with environmental and genetic causes, but for a majority of holoprosencephaly cases the genes associated with the pathogenesis could not be identified so far. Here we report the generation of knockout mice for the ubiquitin E3 ligase NOSIP. The loss of NOSIP in mice causes holoprosencephaly and facial anomalies including cleft lip/palate, cyclopia and facial midline clefting. By a mass spectrometry based protein interaction screen we identified NOSIP as a novel interaction partner of protein phosphatase PP2A. NOSIP mediates the monoubiquitination of the PP2A catalytic subunit and the loss of NOSIP results in an increase in PP2A activity in craniofacial tissue in NOSIP knockout mice. We conclude, that NOSIP is a critical modulator of brain and craniofacial development in mice and a candidate gene for holoprosencephaly in humans.