Mutations in the human OCRL gene, which encodes a phosphatidylinositol(4,5)bisphosphate 5-phosphatase, result in the X-linked oculocerebrorenal syndrome of Lowe. Mice with a targeted disruption of Ocrl have no phenotypic abnormalities. Targeted disruption of its closest paralog, Inpp5b, causes male infertility in the 129S6 background. Mice with disruptions of both genes are lost in utero prior to 9.5-10.5 dpc, indicating that there is a functional overlap between the two paralogs early in development. We analyzed the pattern of X-inactivation in four tissues of distinct embryonic origin from Ocrl (wt/-);Inpp5b (-/-) females to explore the timing and tissue distribution of the functional overlap. X-inactivation was strongly skewed against the disrupted Ocrl (-) allele being on the active X chromosome in all four tissues tested, indicating that there is early selection against cell lineages lacking both Ocrl and Inpp5b. Extraembryonic tissue was also involved in the lethality because there were never any live-born Ocrl (wt/-);Inpp5b (-/-) females when the functional Ocrl (wt ) allele was on the paternal X chromosome, which is preferentially inactivated in trophoblast-derived extraembryonic tissues. Live-born Ocrl (wt/-);Inpp5b (-/-) females were found when the functional Ocrl (wt) allele was maternal, although in fewer numbers than expected. The importance of the extraembryonic tissues in the early embryonic lethality of embryos lacking both Ocrl and Inpp5b is reinforced by the successful isolation of a viable 40,XX Ocrl (-/-);Inpp5b (-/-) embryonic stem cell from the inner cell mass of a 3.5-dpc blastocyst prior to implantation. These results indicate a functional overlap of Ocrl and Inpp5b in most cell lineages, especially in extraembryonic tissues.