Repair of DNA damage by homologous recombination has only recently been established as an important mechanism in maintaining genetic stability in mammalian cells. The recently cloned Xrcc2 gene is a member of the mammalian Rad51 gene family, thought to be central to homologous recombination repair. To understand its function in mammals, we have disrupted Xrcc2 in mice. No Xrcc2−/− animals were found alive, with embryonic lethality occurring from mid-gestation. Xrcc2−/− embryos surviving until later stages of embryogenesis commonly showed developmental abnormalities and died at birth. Neonatal lethality, apparently due to respiratory failure, was associated with a high frequency of apoptotic death of post- mitotic neurons in the developing brain, leading to abnormal cortical structure. Embryonic cells showed genetic instability, revealed by a high level of chromosomal aberrations, and were sensitive to γ-rays. Our findings demonstrate that homologous recombination has an important role in endogenous damage repair in the developing embryo. Xrcc2 disruption identifies a range of defects that arise from malfunction of this repair pathway, and establishes a previously unidentified role for homologous recombination repair in correct neuronal development.