The members of the AP-2 family of transcription factors play important roles during mammalian development and morphogenesis. AP-2γ (Tcfap2c – Mouse Genome Informatics) is a retinoic acid-responsive gene implicated in placental development and the progression of human breast cancer. We show that AP-2γ is present in all cells of preimplantation embryos and becomes restricted to the extra-embryonic lineages at the time of implantation. To study further the biological function of AP-2γ, we have generated Tcfap2c-deficient mice by gene disruption. The majority of Tcfap2c^–/– mice failed to survive beyond 8.5 days post coitum (d.p.c.). At 7.5 d.p.c., Tcfap2c^–/– mutants were typically arrested or retarded in their embryonic development in comparison to controls. Morphological and molecular analyses of mutants revealed that gastrulation could be initiated and that anterior-posterior patterning of the epiblast remained intact. However, the Tcfap2c mutants failed to establish a normal maternal-embryonic interface, and the extra-embryonic tissues were malformed. Moreover, the trophoblast-specific expression of eomesodermin and Cdx2, two genes implicated in FGF-responsive trophoblast stem cell maintenance, was significantly reduced. Chimera studies demonstrated that AP-2γ plays no major autonomous role in the development of the embryo proper. By contrast, the presence of AP-2γ in the extra-embryonic membranes is required for normal development of this compartment and also for survival of the mouse embryo.