The discovery of TATA-binding protein-related factors (TRFs) has suggested alternative mechanisms for gene-specific transcriptional regulation and raised interest in their biological functions. In contrast to recent observations of an embryonic lethal phenotype for TRF2 inactivation in Caenorhabditis elegans and Xenopus laevis, we found that Trf2-deficient mice are viable. However, Trf2^-/- mice are sterile because of a severe defect in spermiogenesis. Postmeiotic round spermatids advance at most to step 7 of differentiation but fail to progress to the elongated form, and gene-specific transcription deficiencies were identified. We speculate that mammals may have evolved more specialized TRF2 functions in the testis that involve transcriptional regulation of genes essential for spermiogenesis.