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The egg yolk of vertebrates contains carotenoids, which account for its characteristic yellow color in some species. Such plant-derived compounds, e.g. beta-carotene, serve as the natural precursors (provitamins) of vitamin A, which is indispensable for chordate development. As egg yolk also contains stored vitamin A, carotenoids have so far been solely discussed as pigments for the coloration of the offspring. Based on our recent molecular identification of the enzyme catalyzing provitamin A conversion to vitamin A, we address a possible role of provitamin A during zebrafish (Danio rerio) development. We cloned the zebrafish gene encoding the vitamin A-forming enzyme, a beta,beta-carotene-15,15'-oxygenase. Analysis of its mRNA expression revealed that it is under complex spatial and temporal control during development. Targeted gene knockdown using the morpholino antisense oligonucleotide technique indicated a vital role of the provitamin A-converting enzyme. Morpholino-injected embryos developed a morphological phenotype that included severe malformation of the eyes, the craniofacial skeleton and pectoral fins, as well as reduced pigmentation. Analyses of gene expression changes in the morphants revealed that distinct retinoic acid-dependent developmental processes are impaired, such as patterning of the hindbrain and differentiation of hindbrain neurons, differentiation of neural crest derivatives (including the craniofacial skeleton), and the establishment of the ventral retina. Our data provide strong evidence that, for several developmental processes, retinoic acid generation depends on local de novo formation of retinal from provitamin A via the carotene oxygenase, revealing an unexpected, essential role for carotenoids in embryonic development.