Lung Kruppel-like factor (LKLF) is a member of the Kruppel-like factor family of transcription factors and is highly expressed in lung with limited distribution in other tissues. Mice lacking LKLF due to inactivation of LKLF by gene targeting die in utero at midgestation around day 12.5 due to severe hemorrhage, making it difficult to study the role of this transcription factor in lung development and function. However, in vitro organ culture of lung buds removed from 11.5-day-old LKLF(-/-) embryos show normal tracheobronchial tree formation. To examine later stages of lung development, the embryonic lethality due to germ line LKLF null mutation was circumvented by constructing LKLF homozygous null mouse embryonic stem cells, using a two-step gene targeting procedure, and determining whether these cells give rise to lung tissue. The targeted cells were used to produce chimeric animals, and the contribution of LKLF-deficient cells to the formation of various internal organs was analyzed. In chimeric mice that survived after birth, null embryonic stem cells contributed significantly to all of the major organs except the lungs. On the other hand, some highly chimeric animals died at birth, and histopathological examination of their lungs suggested abnormalities in their lung development. These studies show that LKLF plays an important role in normal lung development.