Humans afflicted with the Wolcott-Rallison syndrome and mice deficient for PERK (pancreatic endoplasmic reticulum eIF2alpha kinase) show severe postnatal growth retardation. In mice, growth retardation in Perk-/- mutants is manifested within the first few days of neonatal development. Growth parameters of Perk-/- mice, including comparison of body weight to length and organ weights, are consistent with proportional dwarfism. Tibia growth plates exhibited a reduction in proliferative and hypertrophic chondrocytes underlying the longitudinal growth retardation. Neonatal Perk-/- deficient mice show a 75% reduction in liver IGF-I mRNA and serum IGF-I within the first week, whereas the expression of IGF-I mRNA in most other tissues is normal. Injections of IGF-I partially reversed the growth retardation of the Perk-/- mice, whereas GH had no effect. Transgenic rescue of PERK activity in the insulin- secreting beta-cells of the Perk-/- mice reversed the juvenile but not the neonatal growth retardation. We provide evidence that circulating IGF-I is derived from neonatal liver but is independent of GH at this stage. We propose that PERK is required to regulate the expression of IGF-I in the liver during the neonatal period, when IGF-I expression is GH-independent, and that the lack of this regulation results in severe neonatal growth retardation.