IFT172, also known as Selective Lim-domain Binding protein (SLB), is a component of the intraflagellar transport (IFT) complex. In order to evaluate the biological role of the Ift172 gene, we generated a loss-of-function mutation in the mouse. The resulting Slb mutant embryos die between E12.5 and 13.0, and exhibit severe cranio-facial malformations, failure to close the cranial neural tube, holoprosencephaly, heart edema and extensive hemorrhages. Cilia outgrowth in cells of the neuroepithelium is initiated but the axonemes are severely truncated and do not contain visible microtubules. Morphological and molecular analyses revealed a global brain-patterning defect along the dorsal-ventral (DV) and anterior-posterior (AP) axes. We demonstrate that Ift172 gene function is required for early regulation of Fgf8 at the midbrain-hindbrain boundary and maintenance of the isthmic organizer. In addition, Ift172 is required for proper function of the embryonic node, the early embryonic organizer and for formation of the head organizing center (the anterior mesendoderm, or AME). We propose a model suggesting that forebrain and mid-hindbrain growth and AP patterning depends on the early function of Ift172 at gastrulation. Our data suggest that the formation and function of the node and AME in the mouse embryo relies on an indispensable role of Ift172 in cilia morphogenesis and cilia-mediated signaling.