Transforming growth factor beta (TGF beta) regulates the cell cycle and extracellular matrix (ECM) deposition of many cells in vitro. We have analysed chimaeric mouse embryos generated from embryonic stem cells with abnormal receptor expression to study the effect of TGF beta on these processes in vivo and the consequences for normal development. The binding receptor for TGF beta, T beta RII, is first detected in the embryo proper around day 8.5 in the heart. Ectopic expression of T beta RII from the blastocyst stage onward resulted in an embryonic lethal around 9.5 dpc, Analysis of earlier stages revealed that the primitive streak of T beta RII chimaeras failed to elongate. Furthermore, although cells passed through the streak and initially formed mesoderm, they tended to accumulate within the streak. These defects temporally and spatially paralleled the expression of the TGF beta type I receptor, which is first expressed in the node and primitive streak. We present evidence that classical TGF beta-induced growth inhibition was probably the cause of insufficient mesoderm being available for paraxial and axial structures. The results demonstrate that (1) TGF beta mRNA and protein detected previously in early postimplantation embryos is present as a biologically active ligand; and (2) assuming that ectopic expression of T beta RII results in no other changes in ES cells, the absence of T beta RII is the principle reason why the embryo proper is unresponsive to TGF beta ligand until after gastrulation. Dev Dyn 1999:214: 141-151. (C) 1999 Wiley-Liss, Inc.