Members of the M13 family of zinc metalloendopeptidases have been shown to play critical roles in the metabolism of various neuropeptides and peptide hormones, and they have been identified as important therapeutic targets. Recently, a mouse NL1 protein, a novel member of the family, was identified and shown to be expressed mainly in the testis as a secreted protein. To define its physiological role(s), we used a gene targeting strategy to disrupt the endogenous murine Nl1 gene by homologous recombination and generate Nl1 mutant mice. The Nl1(-/-) mice were viable and developed normally, suggesting that zygotic expression of Nl1 is not required for development. However, Nl1(-/-) males produced smaller litters than their wild-type siblings, indicating specific male fertility problems. Reduced fertility may be explained by two impaired processes, decreased egg fertilization and perturbed early development of fertilized eggs. These two phenotypes did not result from gross anatomical modifications of the testis or from impaired spermatogenesis. Basic sperm parameters were also normal. Thus, our findings suggest that one of the roles of NL1 in mice is related to sperm function and that NL1 modulates the processes of fertilization and early embryonic development in vivo.