Polycystic lipomembranous osteodysplasia with sclerosing leukoencephalopathy (PLOSL; MIM 221770), also known as Nasu-Hakola disease, is a recessively inherited disease characterized by a combination of psychotic symptoms rapidly progressing to presenile dementia and bone cysts restricted to wrists and ankles. PLOSL has a global distribution, although most of the patients have been diagnosed in Finland and Japan, with an estimated population prevalence of 2x10-6 (ref. 2) in the Finns. We have previously identified a shared 153-kb ancestor haplotype in all Finnish disease alleles between markers D19S1175 and D19S608 on chromosome 19q13.1 (refs 5,6). Here we characterize the molecular defect in PLOSL by identifying one large deletion in all Finnish PLOSL alleles and another mutation in a Japanese patient, both representing loss-of-function mutations, in the gene encoding TYRO protein tyrosine kinase binding protein (TYROBP; formerly DAP12). TYROBP is a transmembrane protein that has been recognized as a key activating signal transduction element in natural killer (NK) cells. On the plasma membrane of NK cells, TYROBP associates with activating receptors recognizing major histocompatibility complex (MHC) class I molecules. No abnormalities in NK cell function were detected in PLOSL patients homozygous for a null allele of TYROBP.