Endochondral ossification is the prevalent mode of vertebrate skeleton formation; it starts during embryogenesis when cartilage models of long bones develop central regions of hypertrophy which are replaced by bony trabeculae and bone marrow. Although several transcription factors have been implicated in pattern formation in the limbs and axial skeleton, little is known about the transcriptional regulations involved in bone formation. We have created a null allele in the mouse Krox-20 gene, which encodes a zinc finger transcription factor, by in frame insertion of the E. coli lacZ gene and shown that hindbrain segmentation and peripheral nerve myelination are affected in Krox-20-/- embryos. We report here that Krox-20 is also activated in a subpopulation of growth plate hypertrophic chondrocytes and in differentiating osteoblasts and that its disruption severely affects endochondral ossification. Krox-20-/- mice develop skeletal abnormalities including a reduced length and thickness of newly formed bones, a drastic reduction of calcified trabeculae and severe porosity. The periosteal component to bone formation and calcification does not appear to be affected in the homozygous mutant suggesting that the major role for Krox-20 is to be found in the control of the hypertrophic chondrocyte-osteoblast interactions leading to endosteal bone formation.