Protein farnesyltransferase (FTase) is an enzyme responsible for posttranslational modification of proteins carrying a carboxy-terminal CaaX motif. Farnesylation allows substrates to interact with membranes and protein targets. Using gene-targeted mice, we report that FTase is essential for embryonic development, but dispensable for adult homeostasis. Six-month-old FTase-deficient mice display delayed wound healing and maturation defects in erythroid cells. Embryonic fibroblasts lacking FTase have a flat morphology and reduced motility and proliferation rates. Ablation of FTase in two ras oncogene-dependent tumor models has no significant consequences for tumor initiation. However, elimination of FTase during tumor progression had a limited but significant inhibitory effect. These results should help to better understand the role of protein farnesylation in normal tissues and in tumor development.