During closure of the neural tube in the mouse, transcription factor AP-2 is expressed in ectoderm and in neural-crest cells migrating from the cranial neural folds. Cranial neural crest cells provide patterning information for craniofacial morphogenesis, generate most of the skull bones, and together with placodal ectoderm, form the cranial ganglia. To study the role of AP-2 during embryogenesis, we undertook a targeted mutagenesis of the AP-2 gene in the mouse. Here we report that AP-2(-/-) mice died perinatally with cranio-abdominoschisis and severe dismorphogenesis of the face, skull, sensory organs and cranial ganglia. Failure of cranial closure between 9 and 9.5 days postcoitum coincided with increased apoptosis in the midbrain, anterior hindbrain and proximal mesenchyme of the first branchial arch, but did not involve loss of expression of twist or Pax-3, two other regulatory genes known to be required for cranial closure.