Oncogenesis is manifested as uncontrolled cellular proliferation and in some situations a failure of normal differentiation in the transformed cell. This has led to speculation that the normal role of proto-oncogenes during development may be to mediate the relationship between proliferation and differentiation. The advent of gene targeting in ES cells allows the role oncogenes in development to be tested directly. Two recent studies have examined the phenotype of N-myc mutant mice generated by gene targeting. In both reports, the mutation is an embryonic lethal at 11.5 days of gestation confirming a critical role for this proto-oncogene in development and the inability of other members of the myc family to substitute functionally for N-myc. Although the phenotypes are similar in general outline, the two reports differ in the specifics of the morphological and histological abnormalities identified. The disparity may result from the mutation created, the genetic background of the mutant mice or the criteria used to determine abnormalities. Assuredly, there is valuable information to be gained about N-myc function from these mutant mice. However, these reports make it clear that morphological and histological abnormalities in N-myc mutant mice serve as a starting point rather than as an endpoint. The challenge now is to link the defect at the cellular level to the abnormalities at the physiological level.