Spondylo-meta-epiphyseal dysplasia (SMED) with short limbs and abnormal calcifications (SMED-SL) is a rare, autosomal recessive human growth disorder, characterized by disproportionate short stature, short limbs, short broad fingers, abnormal metaphyses and epiphyses, platyspondyly and premature calcifications. Recently, three missense mutations and one splice-site mutation in the DDR2 gene were identified as causative genetic defects for SMED-SL, but the underlying cellular and biochemical mechanisms were not explored. Here we report a novel DDR2 missense mutation, c.337G>A (p.E113K), that causes SMED-SL in two siblings in the United Arab Emirates. Another DDR2 missense mutation, c.2254C>T (p.R752C), matching one of the previously reported SMED-SL mutations, was found in a second affected family. DDR2 is a plasma membrane receptor tyrosine kinase that functions as a collagen receptor. We expressed DDR2 constructs with the identified point mutations in human cell lines and evaluated their localization and functional properties. We found that all SMED-SL missense mutants were defective in collagen-induced receptor activation and that the three previously reported mutants (p.T713I, p.I726R and p.R752C) were retained in the endoplasmic reticulum. The novel mutant (p.E113K), in contrast, trafficked normally, like wild-type DDR2, but failed to bind collagen. This finding is in agreement with our recent structural data identifying Glu113 as an important amino acid in the DDR2 ligand-binding site. Our data thus demonstrate that SMED-SL can result from at least two different loss-of-function mechanisms: namely defects in DDR2 targeting to the plasma membrane or the loss of its ligand-binding activity.