Eph receptors and ephrin ligands are key players in many developmental processes including embryo patterning, angiogenesis, and axon guidance. Eph/ephrin interactions lead to the generation of a bidirectional signal, in which both the Eph receptors and the ephrins activate downstream signaling cascades simultaneously. To understand the role of ephrin-B1 and the importance of ephrin-B1-induced reverse signaling during embryonic development, we have generated mouse lines carrying mutations in the efnb1 gene. Complete ablation of ephrin-B1 resulted in perinatal lethality associated with a range of phenotypes, including defects in neural crest cell (NCC)-derived tissues, incomplete body wall closure, and abnormal skeletal patterning. Conditional deletion of ephrin-B1 demonstrated that ephrin-B1 acts autonomously in NCCs, and controls their migration. Last, a mutation in the PDZ binding domain indicated that ephrin-B1-induced reverse signaling is required in NCCs. Our results demonstrate that ephrin-B1 acts both as a ligand and as a receptor in a tissue-specific manner during embryogenesis.