Srg3 (SWI3-related gene product) is a mouse homolog of yeast SWI3, Drosophila melanogaster MOIRA (also named MOR/BAP155), and human BAF155 and is known as a core subunit of SWI/SNF complex. This complex is involved in the chromatin remodeling required for the regulation of transcriptional processes associated with development, cellular differentiation, and proliferation. We generated mice with a null mutation in the Srg3 locus to examine its function in vivo. Homozygous mutants develop in the early implantation stage but undergo rapid degeneration thereafter. An in vitro outgrowth study revealed that mutant blastocysts hatch, adhere, and form a layer of trophoblast giant cells, but the inner cell mass degenerates after prolonged culture. Interestingly, about 20% of heterozygous mutant embryos display defects in brain development with abnormal organization of the brain, a condition known as exencephaly. Histological examination suggests that exencephaly is caused by the failure in neural fold elevation, resulting in severe brain malformation. Our findings demonstrate that Srg3 is essential for early embryogenesis and plays an important role in the brain development of mice.