The lethal nonagouti (a(x)) mutation is a hypomorphic allele of the agouti coat color locus which, when homozygous, also leads to embryonic death around the time of implantation. To understand the molecular basis of these phenotypes, we identified and cloned a deletion breakpoint junction present in the ax chromosome. Long range restriction mapping demonstrated a simple deletion of approximately 100 kb, which does not affect agouti coding sequences, but begins only 4 kb 3' of the last exon, and thus may affect coat color by removing an agouti 3' enhancer. The Ahcy gene, which codes for the enzyme S-adenosylhomocysteine hydrolase (SAHase), is contained within a 20 kb region within the a(x) deletion. SAHase RNA and protein were detectable in early blastocysts and in embryonic stem cells, respectively, and analysis of embryos derived from an a(x)/a x a(x)/a embryo intercross indicated that a(x)/a embryos die between the late blastocyst and early implantation stages. Treatment of cultured embryos with an SAHase inhibitor, 3-deazaaristeromycin, or with metabolites that can result in elevated levels of cellular SAH, resulted in an inhibition of inner cell mass development, suggesting that loss of SAHase activity in a(x)/a(x) embryos is sufficient to explain their death around the time of implantation.