Amphibian studies have implicated Wnt signaling in the regulation of mesoderm formation, although direct evidence is lacking. We have characterized the expression of 12 mammalian Wnt-genes, identifying three that are expressed during gastrulation. Only one of these, Wnt-3a, is expressed extensively in cells fated to give rise to embryonic mesoderm, at egg cylinder stages. A likely null allele of Wnt-3a was generated by gene targeting. All Wnt-3a-/Wnt-3a- embryos lack caudal somites, have a disrupted notochord, and fail to form a tailbud. Thus, Wnt-3a may regulate dorsal (somitic) mesoderm fate and is required, by late primitive steak stages, for generation of all new embryonic mesoderm. Wnt-3a is also expressed in the dorsal CNS. Mutant embryos show CNS dysmorphology and ectopic expression of a dorsal CNS marker. We suggest that dysmorphology is secondary to the mesodermal and axial defects and that dorsal patterning of the CNS may be regulated by inductive signals arising from surface ectoderm.