The vacuolated lens (vl) mouse mutant causes congenital cataracts and neural tube defects (NTDs), with the NTDs being caused by abnormal neural fold apposition and fusion. Our positional cloning of vl indicates these phenotypes result from a deletion mutation in an uncharacterized orphan G protein-coupled receptor (GPCR), Gpr161. Gpr161 displays restricted expression to the lateral neural folds, developing lens, retina, limb, and CNS. Characterization of the vl mutation indicates that C-terminal tail of Gpr161 is truncated, leading to multiple effects on the protein, including reduced receptor-mediated endocytosis. We have also mapped three modifier quantitative trait loci (QTL) that affect the incidence of either the vl cataract or NTD phenotypes. Bioinformatic, sequence, genetic, and functional data have determined that Foxe3, a key regulator of lens development, is a gene responsible for the vl cataract-modifying phenotype. These studies have extended our understanding of the vl locus in three significant ways. One, the cloning of the vl locus has identified a previously uncharacterized GPCR-ligand pathway necessary for neural fold fusion and lens development, providing insight into the molecular regulation of these developmental processes. Two, our QTL analysis has established vl as a mouse model for studying the multigenic basis of NTDs and cataracts. Three, we have identified Foxe3 as a genetic modifier that interacts with Gpr161 to regulate lens development.