Upon fertilization, remodeling of condensed maternal and paternal gamete DNA occurs to form the diploid genome. In Xenopus laevis, nucleoplasmin 2 (NPM2) decondenses sperm DNA in vitro. To study chromatin remodeling in vivo, we isolated mammalian NPM2 orthologs. Mouse NPM2 accumulates in oocyte nuclei and persists in preimplantation embryos. Npm2 knockout females have fertility defects owing to failed preimplantation embryo development. Although sperm DNA decondensation proceeds without NPM2, abnormalities are evident in oocyte and early embryonic nuclei. These defects include an absence of coalesced nucleolar structures and loss of heterochromatin and deacetylated histone H3 that normally circumscribe nucleoli in oocytes and early embryos, respectively. Thus, Npm2 is a maternal effect gene critical for nuclear and nucleolar organization and embryonic development.