Lmx1b, a LIM-homeodomain protein belongs to a large gene family characterized by common cysteinerich zinc binding motifs that are important in mediating protein-protein interactions. Recently several LIM-homeodomain transcription factors have been shown to be important in various developmental programs. Here we report that targeted disruption of lmx1b in mice results in skeletal defects including hypoplastic nails, absent patellae, and a unique form of renal dysplasia. These abnormalities are similar to the clinical features of nail patella syndrome (NPS), a human autosomal dominant condition characterized by hypoplastic nails, hypoplastic to absent patellae, joint abnormalities, and renal insufficiency and proteinuria. We have characterized the cDNA and gene structure of LMX1B, and mapped it to chromosome 9q34, consistent with the genetic location of NPS. In three patients with classic features of NPS we identified de novo mutations in the homeodomain which result in either premature termination of the polypeptide or abolition of the DNA-binding ability of the protein. In our study, we have correlated the function of lmx1b in different developmental fields with a human skeletal malformation syndrome, NPS, and show that loss of function of lmx1b in mice and LMX1B in humans results in similar phenotypes. The ocular manifestations seen in NPS, including glaucoma, raises the question of whether lmx1b has additional functions in eye development. Together, the data suggest a critical role for this gene in patterning of the skeleton and kidney during development and point to additional studies for the function of this gene in inherited forms of renal failure and ocular abnormalities.