Leucine-rich repeat (LRR) -containing G protein coupled receptor (LGR) family members are characterized by the presence of a seven-transmembrane domain and LRR motifs. We describe a new function for Lgr4 in the development of the gall bladder and cystic duct and in the epithelium-mesenchyme interaction. Lgr4 expression was observed in the gall bladder epithelium when the gall bladder primordium elongated ventrally. Although Lgr4 hypomorphic mutant (Lgr4(Gt/Gt)) embryos developed a normal gall bladder bud at embryonic day (E) 10.25, no further elongation was observed at later stages. At E12.5, the mesenchyme surrounding the gall bladder had completely disappeared in Lgr4(Gt/Gt) embryos, while the gall bladder remained unelongated. Neighboring tissues such as liver and pancreas were unaffected, as revealed by expression of marker genes. This is the first report of a mutant mouse that lacks a gall bladder and cystic duct without affecting the other tissues that derive from the same hepatic diverticulum.