Properly positioned synovial joints are crucial to coordinated skeletal movement. Despite their importance for skeletal development and function, the molecular mechanisms that underlie joint positioning are not well understood. We show that mice carrying an insertional mutation in a previously uncharacterized gene, which we have named Jaws (joints abnormal with splitting), die perinatally with striking skeletal defects, including ectopic interphalangeal joints. These ectopic joints develop along the longitudinal axis and persist at birth, suggesting that JAWS is uniquely required for the orientation and consequent positioning of interphalangeal joints within the endochondral skeleton. Jaws mutant mice also exhibit severe chondrodysplasia characterized by delayed and disorganized maturation of growth plate chondrocytes, together with impaired chondroitin sulfation and abnormal metabolism of the chondroitin sulfate proteoglycan aggrecan. Our findings identify JAWS as a key regulator of chondrogenesis and synovial joint positioning required for the restriction of joint formation to discrete stereotyped locations in the embryonic skeleton.