The X chromosome-linked transcription factor GATA-1 is expressed specifically in erythroid, mast, megakaryocyte, and eosinophil lineages, as well as in hematopoietic progenitors. Prior studies revealed that gene-disrupted GATA-1- embryonic stem cells give rise to adult (or definitive) erythroid precursors arrested at the proerythroblast stage in vitro and fail to contribute to adult red blood cells in chimeric mice but did not clarify a role in embryonic (or yolk sac derived) erythroid cells. To examine the consequences of GATA-1 loss on embryonic erythropoiesis in vivo, we inactivated the GATA-1 locus in embryonic stem cells by gene targeting and transmitted the mutated allele through the mouse germ line. Male GATA-1- embryos die between embryonic day 10.5 and 11.5 (E10.5-E11.5) of gestation. At E9.5, GATA-1- embryos exhibit extreme pallor yet contain embryonic erythroid cells arrested at an early proerythroblast-like stage of their development. Embryos stain weakly with benzidine reagent, and yolk sac cells express globin RNAs, indicating globin gene activation in the absence of GATA-1. Female heterozygotes (GATA-1+/-) are born pale due to random inactivation of the X chromosome bearing the normal allele. However, these mice recover during the neonatal period, presumably as a result of in vivo selection for progenitors able to express GATA-1. Our findings conclusively establish the essential role for GATA-1 in erythropoiesis within the context of the intact developing mouse and further demonstrate that the block to cellular maturation is similar in GATA-1- embryonic and definitive erythroid precursors. Moreover, the recovery of GATA-1+/- mice from anemia seen at birth provides evidence indicating a role for GATA-1 at the hematopoietic progenitor cell level.