Rhizobia-secreted Nod-factors (NFs) are required for nodulation. In the early developmental process of nodulation, a large number of changes occur in gene expression. Lotus japonicus nsp2 mutants isolated from Gifu B-129 ecotype have defects in nodule initiation and display non-nodulating phenotype. Here, we describe positional cloning of LjNSP2 as a component of the nodulation-specific signaling pathway. LjNSP2 was mapped near the translocation site of chromosome 1 where the recombination is severely suppressed. To circumvent this problem, we introduced Lotus burttii as an alternative crossing partner in place of L. japonicus Miyakojima. The development of the high-resolution map using a total of 11 481 F2 plants, in combination with newly developed DNA markers and construction of BAC library, enabled us to identify the gene responsible for mutant phenotype. LjNSP2 encodes a putative transcription factor of the GRAS family that constitutes a subfamily with Medicago truncatula NSP2. LjNSP2 was expressed in roots and early nodules, but strongly suppressed in matured nodules. The expression analysis of NIN and LjENOD40-1 genes in Ljnsp2 mutants indicates that LjNSP2 functions upstream of these genes. These results suggest that LjNSP2 acts as a transcription factor to directly or indirectly switch on the NF-induced genes required for nodule initiation.