The C-terminal binding protein (CtBP) family of proteins has been linked to multiple biological processes through their association with numerous transcription factors. We generated mice harboring mutations in both Ctbp1 and Ctbp2 to address the in vivo function of CtBPs during vertebrate development. Ctbp1 mutant mice are small but viable and fertile, whereas Ctbp2-null mice show defects in axial patterning and die by E10.5 due to aberrant extraembryonic development. Mice harboring various combinations of Ctbp1 and Ctbp2 mutant alleles exhibit dosage-sensitive defects in a wide range of developmental processes. The strong genetic interaction, as well as transcription assays with CtBP-deficient cells, indicates that CtBPs have overlapping roles in regulating gene expression. We suggest that the observed phenotypes reflect the large number of transcription factors whose activities are compromised in the absence of CtBP.