The mCAT-1 gene encodes a basic amino acid transporter that also acts as the receptor for murine ecotropic leukemia viruses. Targeted mutagenesis in embryonic stem cells has been used to introduce a germ-line null mutation into this gene. This mutation removes a domain critical for virus binding and inactivates amino acid transport activity. Homozygous mutant pups generated from these cells were approximately 25% smaller than normal littermates, very anemic, and died on the day of birth. Peripheral blood from homozygotes contained 50% fewer red blood cells, reduced hemoglobin levels, and showed a pronounced normoblastosis. Histological analyses of bone marrow, spleen, and liver showed a decrease in both erythroid progenitors and mature red blood cells. Mutant fetal liver cells behaved normally in in vitro hematopoietic colony-forming assays but generated an anemia when transplanted into irradiated C.B.-17 SCID mice. Furthermore, reconstitution of the white cell compartment of SCID mice by mutant fetal liver cells was less complete than that observed with a mixed population of wild-type and heterozygous fetal liver cells. Primary embryo fibroblasts from mutant mice were completely resistant to ecotropic retrovirus infection. Thus, mCAT-1 not only appears to be the sole receptor for a group of murine ecotropic retroviruses associated with hematological disease but also plays a critical role in both hematopoiesis and growth control during mouse development.