The winged helix transcription factor Fkh6 is expressed in the mesoderm of the gastrointestinal tract directly adjacent to the endoderm-derived epithelium. Homozygous null mice for Fkh6 showed postnatal growth retardation secondary to severe structural abnormalities of the stomach, duodenum, and jejunum. Dysregulation of epithelial cell proliferation in these organs resulted in an approximately fourfold increase in the number of dividing intestinal epithelial cells and marked expansion of the proliferative zone. As a consequence, the tissue architecture of the stomach and small intestine was distorted, with abnormal crypt structure, formation of mucin filled cysts, and lengthening of villi. Changes in the cellular phenotype and composition of the gastric and intestinal epithelia also suggests that epithelial cell-lineage allocation or differentiation may be affected by loss of Fkh6. From the analysis of a number of potential signaling molecules, we found Bmp2 and Bmp4 expression reduced in the gastrointestinal tract of Fkh6 mutant mice, suggesting that Fkh6 directs a signaling cascade that mediates communication between the mesenchyme and endoderm of the gut to regulate cell proliferation.