The hypophosphatemic (Hyp) mouse is a model for human X-linked hypophosphatemia (XLH). To test the hypothesis of an abnormal osteoblast function in XLH, periostea and osteoblasts isolated from normal and Hyp mice were transplanted im into normal and mutant mice. The thickness of the osteoid seams at the periphery of the bone nodules and the osteoid volume were measured in transplants as an index of bone formation. Impaired mineralization was evidenced in transplants of Hyp cells into Hyp mice by excessive osteoid thickness and volume compared with transplants of normal cells into normal mice. When normal cells were transplanted into mutant mice, the osteoid thickness and volume were markedly increased, demonstrating that the extracellular environment is critical for bone formation. In contrast, when Hyp cells were transplanted into normal mice, reduction, but not normalization, of the osteoid thickness and volume was observed. This abnormal bone formation supports the hypothesis of an osteoblast defect in the Hyp mouse.