Nephronophthisis (NPHP) is the most frequent genetic cause of end-stage renal failure in the first three decades of life. It is characterized primarily by renal cysts with extra-renal involvements of the eye and brain. Ten recessive genes responsible for NPHP have been identified by positional cloning. This discovery supported a unifying theory of renal cystic disease, which states that all proteins mutated in cystic kidney diseases of human, mice, or zebrafish are expressed in primary cilia of renal epithelial cells. Mutations in NPHP3 are the cause of human nephronophthisis type 3 and polycystic kidney disease (pcy) mouse mutants. In order to study the functional role of NPHP3 in the normal embryonic development and in the pathogenesis of cystic kidney disease, we characterized the zebrafish ortholog nphp3 by morpholino oligo (MO)-mediated knockdown. When nphp3 function was suppressed by either of two MOs blocking the translation of the protein or the splicing of mRNA, zebrafish embryos displayed hydrocephalus and pronephric cysts. Knockdown of nphp3 also led to situs inversus phenotypes due to defective cilia at the Kupffer's vesicle. We showed that nphp3 genetically interacts with nphp2/inversin and NPHP3 localizes to primary cilia in MDCK cells. Like nphp2/inversin, nphp3 knockdown affected morphogenic cell movement during gastrulation, suggesting nphp3 is essential to regulate planar cell polarity. Thus nphp3, cooperating with nphp2/inversin, plays an essential role related to ciliary function and the knockdown provides an animal model that may be used for studies on pathogenesis and therapy for this disease.