Tuberous sclerosis complex (TSC) is a tumor suppressor gene syndrome in which hamartomas develop in multiple organ systems. Knockout and conditional alleles of Tsc1 and Tsc2 have been previously reported. Here, we describe the generation of a novel hypomorphic allele of Tsc2 (del3), in which exon 3, encoding 37 amino acids near the N terminus of tuberin, is deleted. Embryos homozygous for the del3 allele survive until E13.5, 2 days longer than Tsc2 null embryos. Embryos die from underdevelopment of the liver, deficient hematopoiesis, aberrant vascular development and hemorrhage. Mice that are heterozygous for the del3 allele have a markedly reduced kidney tumor burden in comparison with conventional Tsc2(+/-) mice. Murine embryo fibroblast (MEF) cultures that are homozygous for the del3 allele express mutant tuberin at low levels, and show enhanced activation of mTORC1, similar to Tsc2 null MEFs. Furthermore, the mutant cells show prominent reduction in the activation of AKT. Similar findings were made in the analysis of homozygous del3 embryo lysates. Tsc2-del3 demonstrates GTPase activating protein activity comparable to that of wild-type Tsc2 in a functional assay. These findings indicate that the del3 allele is a hypomorphic allele of Tsc2 with partial function due to reduced expression, and highlight the consistency of AKT downregulation when Tsc1/Tsc2 function is reduced. Tsc2-del3 mice also serve as a model for hypomorphic TSC2 missense mutations reported in TSC patients.