Recently, mutations in ZFHX1B, the gene that encodes Smad-interacting protein-1 (SIP1), were found to be implicated in the etiology of a dominant form of Hirschsprung disease–mental retardation syndrome in humans. To clarify the molecular mechanisms underlying the clinical features of SIP1 deficiency, we generated mice that bear a mutation comparable to those found in several human patients. Here, we show that Zfhx1b-knockout mice do not develop postotic vagal neural crest cells, the precursors of the enteric nervous system that is affected in patients with Hirschsprung disease, and they display a delamination arrest of cranial neural crest cells, which form the skeletomuscular elements of the vertebrate head. This suggests that Sip1 is essential for the development of vagal neural crest precursors and the migratory behavior of cranial neural crest in the mouse. Furthermore, we show that Sip1 is involved in the specification of neuroepithelium.