A palmitate linked to the inositol in glycosylphosphatidylinositol (GPI) is removed in the endoplasmic reticulum immediately after the conjugation of GPI with proteins in most cells. Previously, we identified PGAP1 (post GPI attachment to proteins 1) as a GPI inositoldeacylase that removes the palmitate from inositol. A defect in PGAP1 caused a delay in the transport of GPI-anchored proteins (GPI-APs) from the endoplasmic reticulum to the cell surface in Chinese hamster ovary cells, although the cell-surface expression of GPI-APs in the steady state was normal. Nevertheless, in most cells, GPI-APs undergo deacylation. To elucidate the biological significance of PGAP1 in vivo, we established PGAP1 knock-out mice. Most PGAP1 knock-out mice showed otocephaly, a developmental defect, and died right after birth. However, some survived with growth retardation. Male knock-out mice showed severely reduced fertility despite the capability of ejaculation. Their spermatozoa were normal in number, motility, and ability to ascend the uterus, but were unable to go into the oviduct. In vitro, PGAP1-deficient spermatozoa showed weak attachment to the zona pellucida and a severely diminished rate of fertilization. Therefore, an extra acyl chain in GPI anchors caused severe deleterious effects to development and sperm function.