Our laboratory has previously cloned and purified a protein named PRAP (prolactin receptor-associated protein) that was shown to be a novel 17beta-hydroxysteroid dehydrogenase (HSD) enzyme with dual activity. This enzyme, renamed HSD17B7 or PRAP/17beta-HSD7, converts estrone to estradiol and is also involved in cholesterol biosynthesis. The major site of its expression is the corpus luteum of a great number of species including rodents and humans. To examine the functional significance of HSD17B7 in pregnancy, we generated a knockout mouse model with targeted deletions of exons 1-4 of this gene. We anticipated a mouse with a severe fertility defect due to its inability to regulate estrogen levels during pregnancy. The heterozygous mutant mice are normal in their development and gross anatomy. The females cycle normally, and both male and female are fertile with normal litter size. To our surprise, the breeding of heterozygous mice yielded no viable HSD17B7 null mice. However, we found HSD17B7 null embryo alive in utero on d 8.5 and d 9.5. By d 10.5, the fetuses grow and suffer from severe brain malformation and heart defect. Because the brain depends on in situ cholesterol biosynthesis for its development beginning at d 10, the major cause of fetal death appears to be due to the cholesterol synthetic activity of this enzyme. By ablating HSD17B7 function, we have uncovered, in vivo, an important requirement for this enzyme during fetal development.