Desmoglein 2 (Dsg2) is a Ca²⁺-dependent adhesion molecule of desmosomes and is synthesized in all desmosome-bearing tissues from their earliest appearance onward. To examine the function of Dsg2, its gene was inactivated by homologous recombination in embryonal stem (ES) cells for the generation of knockout mice. DSG2^−/− mice and a considerable number of DSG2^+/− mice died at or shortly after implantation. On the other hand, DSG2^−/− blastocysts developed an apparently normal trophectoderm layer, the first tissue known to produce desmosomes, and hatched properly. Immunofluorescence analyses of these blastocysts showed, however, that the distribution of the desmosomal plaque protein desmoplakin was disturbed, whereas the adherens junction proteins E-cadherin and β-catenin appeared to be unaffected. Unexpectedly, we found that Dsg2 seems to be essential for the inner cell mass and the ES cell population derived therefrom. We present evidence that Dsg2, which is located in desmoplakin-negative wild-type ES cells in non-desmosomal junctions, is needed for normal ES cell proliferation. Our observations thus reveal that important Dsg2 functions are desmosome-independent during early development and are needed for ES cell and early embryo survival.