Abnormalities in WNT signaling are implicated in a broad range of developmental anomalies and also in tumorigenesis. Here we demonstrate that germline mutations in WTX (FAM123B), a gene that encodes a repressor of canonical WNT signaling, cause an X-linked sclerosing bone dysplasia, osteopathia striata congenita with cranial sclerosis (OSCS; MIM300373). This condition is typically characterized by increased bone density and craniofacial malformations in females and lethality in males. The mouse homolog of WTX is expressed in the fetal skeleton, and alternative splicing implicates plasma membrane localization of WTX as a factor associated with survival in males with OSCS. WTX has also been shown to be somatically inactivated in 11-29% of cases of Wilms tumor. Despite being germline for such mutations, individuals with OSCS are not predisposed to tumor development. The observed phenotypic discordance dependent upon whether a mutation is germline or occurs somatically suggests the existence of temporal or spatial constraints on the action of WTX during tumorigenesis.