Mutations in Prophet of PIT1 (Prop1), one of several homeodomain transcription factors that are required for the development of the anterior pituitary gland, are the predominant cause of MPHD (multiple pituitary hormone deficiency) in humans. We show that deletion of Prop1 in mice causes severe pituitary hypoplasia with failure of the entire Pit1 lineage and delayed gonadotrope development. The pituitary hormone deficiencies cause secondary endocrine problems and a high rate of perinatal mortality due to respiratory distress. Lung atelectasis in mutants correlates with reduced levels of NKX2.1 and surfactant. Lethality of mice homozygous for either the null allele or a spontaneous hypomorphic allele is strongly influenced by genetic background. Prop1-null mice are an excellent model for MPHD and may be useful for testing the efficacy of pharmaceutical intervention for neonatal respiratory distress.