The cytochrome P450-dependent monooxygenase system catalyzes the metabolism of xenobiotics and endogenous compounds, including hormones and retinoic acid. In order to establish the role of these enzymes in embryogenesis, we have inactivated the system through the deletion of the gene for the electron donor to all microsomal P450 proteins, cytochrome P450 reductase (Cpr). Mouse embryos homozygous for this deletion died in early to middle gestation (similar to9.5 days postcoitum [dpc]) and exhibited a number of novel phenotypes, including the severe inhibition of vasculogenesis and hematopoiesis. In addition, defects in the brain, limbs, and cell types where CPR was shown to be expressed were observed. Some of the observed abnormalities have been associated with perturbations in retinoic acid homeostasis in later embryogenesis. Consistent with this possibility, embryos at 9.5 dpc had significantly elevated levels of retinoic acid and reduced levels of retinol. Further, some of the observed phenotypes could be either reversed or exacerbated by decreasing or increasing maternal retinoic acid exposure, respectively. Detailed analysis demonstrated a close relationship between the observed phenotype and the expression of genes controlling vasculogenesis. These data demonstrate that the cytochrome P450 system plays a key role in early embryonic development; this process appears to be, at least in part, controlled by regional concentrations of retinoic acid and has profound effects on blood vessel formation.