Hydroxysteroid (17beta) dehydrogenases (HSD17Bs) have a significant role in steroid metabolism by catalyzing the conversion between 17-keto and 17beta-hydroxysteroids. However, several studies in vitro have shown that some of these enzymes may also be involved in other metabolic pathways. Among these enzymes, HSD17B12 has been shown to be involved in both the biosynthesis of estradiol and the elongation of the essential very long fatty acids in vitro and in vivo. To investigate the function of mammalian HSD17B12 in vivo, we generated mice with a null mutation of the Hsd17b12 gene (HSD17B12KO mice) by using a gene-trap vector, resulting in the expression of the lacZ gene of the trapped allele. The beta-galactosidase staining of the heterozygous HSD17B12KO mice revealed that Hsd17b12 is expressed widely in the embryonic day (E) 7.5-E9.5 embryos, with the highest expression in the neural tissue. The HSD17B12KO mice die at E9.5 at latest and present severe developmental defects. Analysis of the knockout embryos revealed that the embryos initiate gastrulation, but organogenesis is severely disrupted. As a result, the E8.5-E9.5 embryos were void of all normal morphological structures. In addition, the inner cell mass of knockout blastocysts showed decreased proliferation capacity in vitro, and the amount of arachidonic acid was significantly decreased in heterozygous HSD17B12 ES cells. This, together with the expression pattern, suggests that in mouse, the HSD17B12 is involved in the synthesis of arachidonic acid and is essential for normal neuronal development during embryogenesis.