A functional skeletal system requires the coordinated development of many different tissue types, including cartilage, bones, joints, and tendons. Members of the Bone morphogenetic protein (BMP) family of secreted signaling molecules have been implicated as endogenous regulators of skeletal development. This is based on their expression during bone and joint formation, their ability to induce ectopic bone and cartilage, and the skeletal abnormalities present in animals with mutations in BMP family members. One member of this family, Growth/differentiation factor 5 (GDF5), is encoded by the mouse brachypodism locus. Mice with mutations in this gene show reductions in the length of bones in the limbs, altered formation of bones and joints in the sternum, and a reduction in the number of bones in the digits. The expression pattern of Gdf5 during normal development and the phenotypes seen in mice with single or double mutations in Gdf5 and Bmp5 suggested that Gdf5 has multiple functions in skeletogenesis, including roles in joint and cartilage development. To further understand the function of GDF5 in skeletal development, we assayed the response of developing chick and mouse limbs to recombinant GDF5 protein. The results from these assays, coupled with an analysis of the development of brachypodism digits, indicate that GDF5 is necessary and sufficient for both cartilage development and the restriction of joint formation to the appropriate location. Thus, GDF5 function in the digits demonstrates a link between cartilage development and joint development and is an important determinant of the pattern of bones and articulations in the digits.