The int-2 gene (also designated fgf-3) was originally identified because its transcription is activated by the nearby integration of mouse mammary tumor virus in virus-induced tumors. Molecular analyses have revealed that the int-2 gene produces at least four mRNAs, all of which encode a protein that has 40-50% amino acid sequence similarity with the fibroblast growth factors (FGFs). int-2 gene expression is localized to a small number of discrete sites in the developing mouse, but has not been detected in any nonneoplastic adult tissue. The expression data and the amino acid sequence similarity with the FGFs suggested several potential roles for int-2 during normal development. To evaluate these possibilities, we initiated a genetic analysis of int-2. A gene-targeting protocol was used to generate embryonic stem (ES) cells that are heterozygous for an insertion of the neo(r) gene into the first protein-coding exon of int-2 These cells were used to establish a line of mice that carry the gene disruption. Animals that are heterozygous for the int-2(neo) allele are normal and fertile. Homozygous mutants survive embryonic development and can be visually identified after 12.5 days of gestation by a short, initially dorsally curled tail. This defect is potentially due to the disruption of int-2 expression in the primitive streak/tail bud. Most of the homozygous mutants die at or soon after birth, but several have survived to adulthood. In addition to the tail phenotype, the surviving homozygotes show, to varying extents, symptoms characteristic of inner ear abnormalities. The development of these defects could be attributed to the disruption of normal int-2 expression in the hindbrain rhombomeres thought to induce inner ear development and/or the otocyst (precursor of the inner ear) itself. Other sites of int-2 expression are not affected by the mutation. Although the tail phenotype is 100% penetrant, the inner ear phenotype caused by this mutation shows reduced penetrance and variable expressivity. A second int-2 allele was generated in ES cells by using homologous recombination to introduce a lacZ reporter gene into the int-2 locus. This allele has also been established in a line of mice. The pattern of beta-galactosidase activity in carriers of the int-2(lacZ) allele has been examined in embryos from 8.5-14.5 days of gestation and in neonatal heads using whole mount X-gal staining. Expression of the lacZ gene mirrors the expected pattern of int-2 mRNA. Several new sites int-2 of expression not identified in the initial in situ hybridization studies of int-2 mRNA have also been identified. Compound heterozygotes (int-2(neo)/int-2(lacZ)) were found to have the same defects in tail and inner ear development as homozygous int-2(neo) mice. After staining for beta-galactosidase activity, these mutants should allow an analysis of the int-2 mutant phenotype at the cellular level. (C) 1994 Wiley-Liss, Inc.