The spectacular increase in productivity of dairy cattle has been accompanied by a decline in fertility. It is assumed that this reduction is due to the negative energy balance of high producing cows. We herein describe the dissection of a fertility QTL in Nordic Red cattle to a 660-Kb deletion on BTa 12. The deletion encompasses four genes and affects fertility by causing death in homozygous embryos. Despite its deleterious effect 32% of the Finnish Ayrshire animals carry the deletion. We show that the deletion has a positive effect on milk yield and that the balancing selection maintains it at a higher frequency. Our study demonstrates the Embryonic lethal mutations are partly responsible for decline in fertility and that associated positive effects on milk yield may partly account for the negative genetic correlation.