Early in female mammalian embryonic development, cells randomly inactivate one of the two X chromosomes to achieve overall equal inactivation of parental X-linked alleles. Hcfc1 is a highly conserved X-linked mouse gene that encodes HCF-1 - a transcriptional co-regulator implicated in cell proliferation in tissue culture cells. By generating a Cre-recombinase inducible Hcfc1 knock-out (Hcfc1(lox)) allele in mice, we have probed the role of HCF-1 in actively proliferating embryonic cells and in cell-cycle re-entry of resting differentiated adult cells using a liver regeneration model. HCF-1 function is required for both extraembryonic and embryonic development. In heterozygous Hcfc1(lox/+) female embryos, however, embryonic epiblast-specific Cre-induced Hcfc1 deletion (creating an Hcfc1(epiKO) allele) around E5.5 is well tolerated; it leads to a mixture of HCF-1-positive and -negative epiblast cells owing to random X-chromosome inactivation of the wild-type or Hcfc1(epiKO) mutant allele. At E6.5 and E7.5, both HCF-1-positive and -negative epiblast cells proliferate, but gradually by E8.5, HCF-1-negative cells disappear owing to cell-cycle exit and apoptosis. Although generating a temporary developmental retardation, the loss of HCF-1-negative cells is tolerated, leading to viable heterozygous offspring with 100% skewed inactivation of the X-linked Hcfc1(epiKO) allele. In resting adult liver cells, the requirement for HCF-1 in cell proliferation was more evident as hepatocytes lacking HCF-1 fail to re-enter the cell cycle and thus to proliferate during liver regeneration. The survival of the heterozygous Hcfc1(epiKO/+) female embryos, even with half the cells genetically compromised, illustrates the developmental plasticity of the post-implantation mouse embryo - in this instance, permitting survival of females heterozygous for an X-linked embryonic lethal allele.