The endoplasmic reticulum (ER) enzyme 3-hydroxy-3-methylglutaryl coenzyme A (HMG-CoA) reductase, which converts HMG-CoA to mevalonate, catalyzes the ratelimiting step in cholesterol biosynthesis. Because this mevalonate pathway also produces several non-sterol isoprenoid compounds, the level of HMG-CoA reductase activity may coordinate many cellular processes and functions. We used gene targeting to knock out the mouse HMG-CoA reductase gene. The heterozygous mutant mice (Hmgcr+/-) appeared normal in their development and gross anatomy and were fertile. Although HMG-CoA reductase activities were reduced in Hmgcr+/- embryonic fibroblasts, the enzyme activities and cholesterol biosynthesis remained unaffected in the liver from Hmgcr+/- mice, suggesting that the haploid amount of Hmgcr gene is not rate-limiting in the hepatic cholesterol homeostasis. Consistently, plasma lipoprotein profiles were similar between Hmgcr+/- and Hmgcr+/+ mice. In contrast, the embryos homozygous for the Hmgcr mutant allele were recovered at the blastocyst stage, but not at E8.5, indicating that HMG-CoA reductase is crucial for early development of the mouse embryos. The lethal phenotype was not completely rescued by supplementing the dams with mevalonate. Although it has been postulated that a second, peroxisome-specific HMG-CoA reductase could substitute for the ER reductase in vitro, we speculate that the putative peroxisomal reductase gene, if existed, does not fully compensate for the lack of the ER enzyme at least in embryogenesis.