In order to evaluate the involvement of the type II collagen regulatory sequences in development, we have injected a construct containing a toxin gene under the control of the rat type II collagen promoter and enhancer. The construct, pDAS10-DTA, contained the diphtheria toxin A chain gene under the control of type II collagen sequences which had been used previously to target cartilagenous tissues in transgenics. Inspection of developing fetuses at various stages of gestation revealed a high number of aborted implants as well as abnormally developing fetuses. These abnormal fetuses were of small size, had shortened and underdeveloped limbs, cleft palates, and generally resembled a phenotype similar to chondrodystrophic mice. Histological comparisons of normal and abnormal fetuses indicated a reduced amount of extracellular matrix surrounding chondrocytes, and a disorganized appearance of the tissue. These results suggest that the expression of the toxin has occurred in chondrocytes and altered the survival and development of the transgenic mice. These results also indicate that the promoter and enhancer sequences contained in the transgene controlled the developmental expression of the type II collagen gene expression.