Familial dysautonomia (FD), a devastating hereditary sensory and autonomic neuropathy, results from an intronic mutation in the IKBKAP gene that disrupts normal mRNA splicing and leads to tissue-specific reduction of IKBKAP protein (IKAP) in the nervous system. To better understand the roles of IKAP in vivo, an Ikbkap knockout mouse model was created. Results from our study show that ablating Ikbkap leads to embryonic lethality, with no homozygous Ikbkap knockout (Ikbkap^−/−) embryos surviving beyond 12.5 days postcoitum. Morphological analyses of the Ikbkap^−/− conceptus at different stages revealed abnormalities in both the visceral yolk sac and the embryo, including stunted extraembryonic blood vessel formation, delayed entry into midgastrulation, disoriented dorsal primitive neural alignment, and failure to establish the embryonic vascular system. Further, we demonstrate downregulation of several genes that are important for neurulation and vascular development in the Ikbkap^−/− embryos and show that this correlates with a defect in transcriptional elongation-coupled histone acetylation. Finally, we show that the embryonic lethality resulting from Ikbkap ablation can be rescued by a human IKBKAP transgene. For the first time, we demonstrate that IKAP is crucial for both vascular and neural development during embryogenesis and that protein function is conserved between mouse and human.