Holoprosencephaly (HPE) is the most common structural anomaly of the human brain, resulting from incomplete cleavage of the developing forebrain during embryogenesis. Haploinsufficient mutations in the TG-interacting factor (TGIF) gene were previously identified in a subset of HPE families and sporadic patients, and this gene is located within a region of chromosome 18 that is associated with nonrandom chromosomal aberrations in HPE patients. TGIF is a three-amino-acid loop extension (TALE) homeodomain-containing transcription factor that functions both as a corepressor of the transforming growth factor beta (TGF-beta) pathway and as a competitor of the retinoic acid pathway. Here we describe mice deficient in Tgif that exhibited laterality defects and growth retardation and developed kinked tails. Cellular analysis of mutant mouse embryonic fibroblasts (MEFs) demonstrated for the first time that Tgif regulates proliferation and progression through the G1 cell cycle phase. Additionally, wild-type human TGIF was able to rescue this proliferative defect in MEFs. In contrast, a subset of human Tgif mutations detected in HPE patients was unable to rescue the proliferative defect. However, an absence of Tgif did not alter the normal inhibition of proliferation caused by treatment with TGF-beta or retinoic acid. Developmental control of proliferation by Tgif may play a role in the pathogenesis of HPE.