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Cyclase-associated proteins are highly conserved proteins that have a role in the regulation of actin dynamics. Higher eukaryotes have two isoforms, CAP1 and CAP2. To study the in vivo function of CAP2, we generated mice in which the CAP2 gene was inactivated by a gene-trap approach. Mutant mice showed a decrease in body weight and had a decreased survival rate. Further, they developed a severe cardiac defect marked by dilated cardiomyopathy (DCM) associated with drastic reduction in basal heart rate and prolongations in atrial and ventricular conduction times. Moreover, CAP2-deficient myofibrils exhibited reduced cooperativity of calcium-regulated force development. At the microscopic level, we observed disarrayed sarcomeres with development of fibrosis. We analyzed CAP2's role in actin assembly and found that it sequesters G-actin and efficiently fragments filaments. This activity resides completely in its WASP homology domain. Thus CAP2 is an essential component of the myocardial sarcomere and is essential for physiological functioning of the cardiac system, and a deficiency leads to DCM and various cardiac defects.