The mouse brachypodism locus encodes a bone morphogenetic protein (BMP)-like molecule called growth/differentiation factor 5 (GDF5). Here we show that Gdf5 transcripts are expressed in a striking pattern of transverse stripes within many skeletal precursors in the developing limb. The number, location and time of appearance of these stripes corresponds to the sites where joints will later form between skeletal elements. Null mutations in Gdf5 disrupt the formation of more than 30% of the synovial joints in the limb, leading to complete or partial fusions between particular skeletal elements, and changes in the patterns of repeating structures in the digits, wrists and ankles. Mice carrying null mutations in both Gdf5 and another BMP family member, Bmp5, show additional abnormalities not observed in either of the single mutants. These defects include disruption of the sternebrae within the sternum and abnormal formation of the fibrocartilaginous joints between the sternebrae and ribs. Previous studies have shown that members of the BMP family are required for normal development of cartilage and bone. The current studies suggest that particular BMP family members may also play an essential role in the segmentation process that cleaves skeletal precursors into separate elements. This process helps determine the number of elements in repeating series in both limbs and sternum, and is required for normal generation of the functional articulations between many adjacent structures in the vertebrate skeleton.