Inheritance of an inactivated form of the VHL tumor suppressor gene predisposes patients to develop von Hippel–Lindau disease, and somatic VHL inactivation is an early genetic event leading to the development of sporadic renal cell carcinoma. The VHL gene was disrupted by targeted homologous recombination in murine embryonic stem cells, and a mouse line containing an inactivated VHL allele was generated. While heterozygous VHL (+/−) mice appeared phenotypically normal, VHL −/− mice died in utero at 10.5 to 12.5 days of gestation (E10.5 to E12.5). Homozygous VHL −/− embryos appeared to develop normally until E9.5 to E10.5, when placental dysgenesis developed. Embryonic vasculogenesis of the placenta failed to occur in VHL −/− mice, and hemorrhagic lesions developed in the placenta. Subsequent hemorrhage in VHL −/− embryos caused necrosis and death. These results indicate that VHL expression is critical for normal extraembryonic vascular development.