Transcription factors with a basic helix–loop–helix (HLH) motif have been shown to be crucial for various cell differentiation processes during development of multicellular organisms. Id proteins inhibit the functions of these transcription factors in a dominant-negative manner by suppressing their heterodimerization partners through the HLH domains^,,. Members of the Id family also promote cell proliferation^,, implying a role in the control of cell differentiation. Here we show that Id2 is indispensable for normal development of mice. Id2^−/− mice lack lymph nodes and Peyer's patches. However, their splenic architecture is normal, exhibiting T-cell and B-cell compartments and distinct germinal centres. The cell population that produces lymphotoxins, essential factors for the development of secondary lymphoid organs^,,,,,, is barely detectable in the Id2^−/− intestine. Furthermore, the null mutants show a greatly reduced population of natural killer (NK) cells, which is due to an intrinsic defect in NK-cell precursors. Our results indicate that Id2 has an essential role in the generation of peripheral lymphoid organs and NK cells.