Inactivating mutations of the PHEX (phosphate-regulating gene with homologies to endopeptidases on the X chromosome) endopeptidase, the disease-causing gene in X-linked hypophosphatemia (XLH), results in increased circulating levels of fibroblastic growth factor-23 (FGF23), a bone-derived phosphaturic factor. To determine the causal role of FGF23 in XLH, we generated a combined Fgf23-deficient enhanced green fluorescent protein (eGFP) reporter and Phex-deficient Hyp mouse model (Fgf23(+/-)/Hyp). eGFP expression was expressed in osteocytes embedded in bone that exhibited marked upregulation of eGFP in response to Phex deficiency and in CD31-positive cells in bone marrow venules that expressed low eGFP levels independently of Phex. In bone marrow stromal cells (BMSCs) derived from Fgf23(-/-)/Hyp mice, eGFP expression was also selectively increased in osteocyte-like cells within mineralization nodules and detected in low levels in CD31-positive cells. Surprisingly, eGFP expression was not increased in cell surface osteoblasts, indicating that Phex deficiency is necessary but not sufficient for increased Fgf23 expression in the osteoblast lineage. Additional factors, associated with either osteocyte differentiation and/or extracellular matrix, are necessary for Phex deficiency to stimulate Fgf23 gene transcription in bone. Regardless, the deletion of Fgf23 from Hyp mice reversed the hypophosphatemia, abnormal 1,25(OH)(2)D(3) levels, rickets, and osteomalacia associated with Phex deficiency. These results suggest that Fgf23 acts downstream of Phex to cause both the renal and bone phenotypes in Hyp mice.