The H beta 58 transgenic mouse line carries a recessive insertional mutation that results in developmental abnormalities beginning at day 7.5 p.c. and embryonic arrest at about day 9.5. In this paper, we describe the characterization of a novel gene encoded at the H beta 58 locus, whose disruption appears to be responsible for the mutant phenotype. The wild-type H beta 58 gene encodes a single 2.7 kb mRNA during embryonic and fetal development, and in many adult somatic tissues. In the mutant locus, this transcription unit is split by the transgene insertion, and one of its coding exons is deleted. Consistent with the physical disruption of the gene, the level of the H beta 58 mRNA in heterozygous mutant mouse tissues was half the normal level, indicating that the mutant allele fails to encode a stable mRNA. In situ hybridization studies revealed that expression of the wild-type H beta 58 gene begins in the oocyte, and continues throughout pre- and post-implantation embryogenesis, despite the fact that homozygous mutant embryos develop successfully through the egg cylinder stage (day 6.5 p.c.). In the early post-implantation embryo, expression of the normal H beta 58 gene is relatively low in the embryonic ectoderm, the tissue displaying the earliest phenotypic effects of the mutation, and highest in the visceral endoderm. We therefore propose that the effects of the mutation on the embryonic ectoderm may be exerted indirectly, via the visceral endoderm. Sequence analysis of H beta 58 cDNA clones revealed no homology between the 38 × 10(3) M(r) H beta 58 protein and other known proteins. However, the H beta 58 gene displayed extremely strong conservation between mammals and birds (greater than 96% amino acid identity), although it appeared less conserved in amphibians and invertebrates.