The temporomandibular joint (TMJ) is a unique synovial joint whose development differs from the formation of other synovial joints. Mutations have been associated with the developmental defects of the TMJ only in a few genes. In this study, we report the expression of the homeobox gene Shox2 in the cranial neural crest derived mesenchymal cells of the maxilla-mandibular junction and later in the progenitor cells and undifferentiated chondrocytes of the condyle as well as the glenoid fossa of the developing TMJ. A conditional inactivation of Shox2 in the cranial neural crest-derived cells causes developmental abnormalities in the TMJ, including dysplasia of the condyle and glenoid fossa. The articulating disc forms but fuses with the fibrous layers of the condyle and glenoid fossa, clinically known as TMJ ankylosis. Histological examination indicates a delay in development in the mutant TMJ, accompanied by a significantly reduced rate of cell proliferation. In situ hybridization further demonstrates an altered expression of several key osteogenic genes and a delayed expression of the osteogenic differentiation markers. Shox2 appears to regulate the expression of osteogenic genes and is essential for the development and function of the TMJ. The Shox2 conditional mutant thus provides a unique animal model of TMJ ankylosis.