The transcriptional activity of LIM-homeodomain (LIM-HD) proteins is regulated by their interactions with various factors that bind to the LIM domain. We show that reduced expression of single-stranded DNA-binding protein 1 (Ssdp1), which encodes a co-factor of LIM domain interacting protein 1 (Ldb1), in the mouse mutant headshrinker (hsk)disrupts anterior head development by partially mimicking Lim1mutants. Although the anterior visceral endoderm and the anterior definitive endoderm, which together comprise the head organizer, were able to form normally in Ssdp1^hsk/hsk mutants, development of the prechordal plate was compromised. Head development is partially initiated in Ssdp1^hsk/hsk mutants, but neuroectoderm tissue anterior to the midbrain-hindbrain boundary is lost, without a concomitant increase in apoptosis. Cell proliferation is globally reduced in Ssdp1^hsk/hsk mutants, and approximately half also exhibit smaller body size, similar to the phenotype observed in Lim1 and Ldb1 mutants. We also show that Ssdp1 contains an activation domain and is able to enhance transcriptional activation through a Lim1-Ldb1 complex in transfected cells, and that Ssdp1 interacts genetically with Lim1 and Ldb1 in both head development and body growth. These results suggest that Ssdp1 regulates the development of late head organizer tissues and body growth by functioning as an essential activator component of a Lim1 complex through interaction with Ldb1.