We have previously shown that Sox18 is expressed in developing vascular endothelium and hair follicles during mouse embryogenesis and that point mutations in Sox18 are the underlying cause of cardiovascular and hair follicle defects in ragged (Ra) mice. Here we describe the analysis of Sox18-/- mice produced by gene targeting. Despite the profound defects seen in Ra mice, Sox18-/- mice have no obvious cardiovascular defects and only a mild coat defect with a reduced proportion of zigzag hairs. A reduction in the amount of pheomelanin pigmentation in hair shafts was also observed; later-forming hair follicles showed a reduced subapical pheomelanin band, giving Sox18-/- mice a slightly darker appearance than Sox18+/+ and Sox18+/- siblings. Sox18-/- mice are viable and fertile and show no difference in the ability to thrive relative to littermates. Because of the mild effect of the mutation on the phenotype of Sox18-/- mice, we conclude that the semidominant nature of the Ra mutations is due to a trans-dominant negative effect mediated by the mutant SOX18 proteins rather than haploinsufficiency as has been observed for other SOX genes. Due to the similarity of SOX18 to other subgroup F SOX proteins, SOX7 and -17, and the overlap in expression of these genes, functional redundancy amongst these SOX proteins could also account for the mild phenotype of Sox18-/- mice.