Meckel-Gruber syndrome (MKS) is an autosomal recessive lethal malformation syndrome characterized by renal cystic dysplasia, central nervous system malformations (typically, posterior occipital encephalocele), and hepatic developmental defects. Two MKS genes, MKS1 and MKS3, have been identified recently. The present study describes the cellular, sub-cellular and functional characterization of the novel proteins, MKS1 and meckelin, encoded by these genes. In situ hybridization studies for MKS3 in early human embryos showed transcript localizations in agreement with the tissue phenotype of MKS patients. Both MKS proteins predominantly localized to epithelial cells, including proximal renal tubules and biliary epithelial cells. MKS1 localized to basal bodies, while meckelin localized both to the primary cilium and to the plasma membrane in ciliated cell-lines and primary cells. Meckelin protein with the Q376P missense mutation was unable to localize at the cell membrane. siRNA-mediated reduction of Mks1 and Mks3 expression in a ciliated epithelial cell-line blocked centriole migration to the apical membrane and consequent formation of the primary cilium. Co-immunoprecipitation experiments show that wild-type meckelin and MKS1 interact and, in three-dimensional tissue culture assays, epithelial branching morphogenesis was severely impaired. These results suggest that MKS proteins mediate a fundamental developmental stage of ciliary formation and epithelial morphogenesis.