Ubiquitin-conjugating enzymes (E2 or Ubc) constitute a family of conserved proteins that play a key role in ubiquitin-dependent degradation of proteins in eukaryotes. We describe here a transgenic mouse strain where retrovirus integration into an Ubc gene, designated UbcM4, results in a recessive-lethal mutation. UbcM4 is the mouse homologue of the previously described human UbcH7 that is involved in the in vitro ubiquitination of several proteins including the tumor suppressor protein p53. The provirus is located in the first intron of the gene. When both alleles are mutated the level of steady-state mRNA is reduced by about 70%. About a third of homozygous mutant embryos die around day 11.5 of gestation. Embryos that survive that stage are growth retarded and die perinatally. The lethal phenotype is most likely caused by impairment of placenta development as this is the only organ that consistently showed pathological defects. The placental labyrinth is drastically reduced in size and vascularization is disturbed. The UbcM4 mouse mutant represents the first example in mammals of a mutation in a gene involved in ubiquitin conjugation. Its recessive-lethal phenotype demonstrates that the ubiquitin system plays an essential role during mouse development.