The basic helix-loop-helix (bHLH) transcription factors, Handl and Hand2 (refs 1,2), also called eHand/Hxt/Thing1 and dHand/Hed/Thing2 (refs 3,4), respectively, are expressed in the heart and certain neural-crest derivatives during embryogenesis. In addition, Handl is expressed in extraembryonic membranes, whereas Hand2 is expressed in the deciduum. Previous studies have demonstrated that Hand2 is required for formation of the right ventricle of the heart and the aortic arch arteries⁵. We have generated a germline mutation in the mouse Handl gene by replacing the first coding exon with a β-galactosidase reporter gene. Embryos homozygous for the Hand1 null allele died between embryonic days 8.5 and 9.5 and exhibited yolk sac abnormalities due to a deficiency in extraembryonic mesoderm. Heart development was also perturbed and did not progress beyond the cardiac-looping stage. Our results demonstrate important roles for Handl in extraembryonic mesodermal and heart development.