All nucleated cells make phosphatidylcholine via the CDP-choline pathway. Liver has an alternative pathway in which phosphatidylcholine is made by methylation of phosphatidylethanolamine catalyzed by phosphatidylethanolamine N-methyltransferase (PEMT). We investigated the function of PEMT and its role in animal physiology by targeted disruption of its gene, Pempt2. A targeting vector that interrupts exon 2 was constructed and introduced into mice yielding three genotypes: normal (+/+), heterozygotes (+/−), and homozygotes (−/−) for the disrupted PEMT gene. Only a trace of PE methylation activity remained in Pempt2(−/−) mice. Antibody to one form of the enzyme, PEMT2, indicated complete loss of this protein from Pempt2(−/−) mice and a decrease in Pempt2(+/−) mice, compared with Pempt2(+/+) mice. The levels of hepatic phosphatidylethanolamine and phosphatidylcholine were minimally affected. The active form of CTP:phosphocholine cytidylyltransferase, the regulated enzyme in the CDP-choline pathway, was increased 60% in the PEMT-deficient mice. Injection of [l-methyl-3H]methionine demonstrated that the in vivo PEMT activity was eliminated in the Pempt2(−/−) mice and markedly decreased in the Pempt2(+/−) mice. This experiment also demonstrated that the choline moiety derived from PEMT in the liver can be distributed via the plasma throughout the mouse where it is found as phosphatidylcholine, lysophosphatidylcholine, and sphingomyelin. Mice homozygous for the disrupted Pempt2 gene displayed no abnormal phenotype, normal hepatocyte morphology, normal plasma lipid levels and no differences in bile composition. This is the first application of the “knockout mouse” technique to a gene for phospholipid biosynthesis.