Mice homozygous for targeted disruption of the zinc finger domain of Gli2 (Gli2(zfd/zfd)) die at birth with developmental defects in several organ systems including the skeleton. The current studies were undertaken to define the role of Gli2 in endochondral bone development by characterizing the molecular defects in the limbs and vertebrae of Gli2(zfd/zfd) mice. The bones of mutant mice removed by cesarian section at E16.5 and E18.5 demonstrated delayed endochondral ossification. This was accompanied by an increase in the length of cartilaginous growth plates, reduced bone tissue in the femur and tibia and by failure to develop the primary ossification centre in vertebral bodies. The growth plates of tibiae and vertebrae exhibited increased numbers of proliferating and hypertrophic chondrocytes with no apparent alteration in matrix mineralisation. The changes in growth plate morphology were accompanied by an increase in expression of FGF2 in proliferating chondrocytes and decreased expression of Indian hedgehog (Ihh), patched (Ptc) and parathyroid-hormone-related protein (PTHrP) in prehypertrophic cells. Furthermore, there was a reduction in expression of angiogenic molecules in hypertrophic chondrocytes, which was accompanied by a decrease in chondroclasts at the cartilage bone interface, fewer osteoblasts lining trabecular surfaces and a reduced volume of metaphyseal bone. These results indicate that functional Gli2 is necessary for normal endochondral bone development and that its absence results in increased proliferation of immature chondrocytes and decreased resorption of mineralised cartilage and bone formation.