The Nczf gene has been identified as one of Ncx target genes and encodes a novel KRAB zinc-finger protein, which functions as a sequence specific transcriptional repressor. In order to elucidate Nczf functions, we generated Nczf knockout (Nczf-/-) mice. Nczf-/- mice died around embryonic day 8.5 (E8.5) with small body size and impairment of axial rotation. Histopathological analysis revealed that the cell number decreased and pyknotic cells were occasionally observed. We examined the expression of cell cycle related genes in Nczf-/- mice. p27 expression was increased in E8.0 Nczf-/- mice compared to that of wild type mice. Nczf knockdown by siRNA resulted in increased expression of p27 in mouse embryonic fibroblasts (MEFs). Furthermore, p27 promoter luciferase reporter gene analysis confirmed the regulation of p27 mRNA expression by Nczf. Nczf-/-; p27-/- double knockout mice survived until E11.5 and the defect of axial rotation was restored. These data suggest that p27 repression by Nczf is essential in the developing embryo.