The brachydactylies are a group of inherited disorders of the hands characterized by shortened digits. Mutations in the tyrosine kinase receptor Ror2 cause brachydactyly type B (BDB). Mutations in GDF5, a member of the BMP/TGF-beta ligand family, cause brachydactyly type C (BDC) whereas mutations in the receptor for GDF5, BRI-b, cause brachydactyly type A2 (BDA2). There is considerable degree of phenotypic overlap between the subtypes BDB, BDC and BDA2. Here we demonstrate that all three components are involved in GDF5 induced regulation of chondrogenesis. We show that Ror2 (tyrosine kinase receptor) and BRI-b (serine/threonine kinase receptor) form a ligand independent heteromeric complex. The frizzled-like-CRD domain of Ror2 is required for this complex. Within that complex Ror2 gets transphosphorylated by BRI-b. We show that Ror2 modulates GDF5 signalling by inhibition of Smad1/5 signalling and by activating a Smad-independent pathway. Both pathways however, are needed for chondrogenic differentiation as demonstrated in ATDC5 cells. The functional interaction of Ror2 with GDF5 and BRI-b was genetically confirmed by the presence of epistatic effects in crosses of Ror2, BRI-b and Gdf5 deficient mice. These results indicate for the first time a direct interaction of Ser/Thr- and Tyr-Kinase receptors and provide evidence for modulation of the Smad-pathway and GDF5 triggered chondrogenesis.