To understand the normal, physiological role of the c-src proto-oncogene, a null mutation was introduced into the gene by homologous recombination in mouse embryonic stem cells. Two independent targeted clones were used to generate chimeras that transmitted the mutated allele to their offspring. Intercrossing of heterozygotes gave rise to live born homozygotes, but most of these mice died within the first few weeks of birth. Histological and hematological examination of the homozygous mutants did not reveal detectable abnormalities in the brain or platelets, where src is most highly expressed. However, these mutants were deficient in bone remodeling, indicating impaired osteoclast function, and developed osteopetrosis. These results demonstrate that src is not required for general cell viability (possibly because of functional overlap with other tyrosine kinases related to src) and uncover an essential role for src in bone formation.