In 1985, Blau reported a family with 11 members in four generations affected by granulomatous arthritis, iritis, skin rash, and periarticular synovial cysts. We report a second family with these abnormalities, thereby confirming this syndrome as a distinct familial entity with transmission compatible with autosomal dominant inheritance. Affected members in our family included a mother and two daughters. Disease onset was at 10 months to 8 years of age. Each had uveitis, symmetric polyarthritis, and synovial cysts overlying the ankle and wrist joints. In addition, both daughters had an intermittent generalized erythematous papular rash that on biopsy revealed noncaseating granulomatous infiltration. All three patients improved during alternate-day steroid therapy. Recognition of this disorder as distinct from other, more common causes of arthritis is important because of the apparent autosomal dominant transmission and because of the excellent responses to low-dose steroid therapy.