The DNA-binding activity of AP-1 proteins is modulated, in vitro, by a posttranslational mechanism involving reduction oxidation. This mode of regulation has been proposed to control both the transcriptional activity and the oncogenic potential of Fos and Jun. Previous studies revealed that reduction of oxidized Fos and Jun by a cellular protein, Ref-1, stimulates sequence-specific AP-1 DNA-binding activity. Ref-1, a bifunctional protein, is also capable of initiating the repair of apurinic/apyrymidinic sites in damaged DNA. The relationship between the redox and DNA repair activities of Ref-1 is intriguing; both activities have been suggested to play an important role in the cellular response to oxidative stress. To investigate the physiological function of Ref-1, we used a gene targeting strategy to generate mice lacking a functional ref-1 gene. We report here that heterozygous mutant mice develop into adulthood without any apparent abnormalities. In contrast, homozygous mutant mice, lacking a functional ref-1 gene, die during embryonic development. Detailed analysis indicates that death occurs following blastocyst formation, shortly after the time of implantation. Degeneration of the mutant embryos is clearly evident at embryonic day 5.5. These findings demonstrate that Ref-1 is essential for early embryonic development.