Segmentation in vertebrates first arises when the unsegmented paraxial mesoderm subdivides to form paired epithelial spheres called somites. The Notch signalling pathway is important in regulating the formation and anterior-posterior patterning of the vertebrate somite. One component of the Notch signalling pathway in Drosophila is the fringe gene, which encodes a secreted signalling molecule required for activation of Notch during specification of the wing margin. Here we show that mice homozygous for a targeted mutation of the lunatic fringe (Lfng) gene, one of the mouse homologues of fringe, have defects in somite formation and anterior-posterior patterning of the somites. Somites in the mutant embryos are irregular in size and shape, and their anterior-posterior patterning is disturbed. Marker analysis revealed that in the presomitic mesoderm of the mutant embryos, sharply demarcated domains of expression of several components of the Notch signalling pathway are replaced by even gradients of gene expression. These results indicate that Lfng encodes an essential component of the Notch signalling pathway during somitogenesis in mice.