Rat hypodactyly (hd) is an autosomal recessive mutation manifesting in homozygotes as reduction or loss of digits II and III. We mapped the hd allele to a short segment of chromosome 10, containing 16 genes. None of these genes has been shown to influence limb development yet. In situ hybridization showed no changes in several important patterning genes (Shh, Fgf8, Bmp2, 4, 7). However, we found that expression of cartilage condensation marker Sox9, and Bmp receptor Bmpr1b (acting as an upstream activator of Sox9 expression) is absent from the subepithelial mesenchyme of the digit condensations II and III. The failure of the chondrogenic condensations to extend towards the subepithelial mesenchyme may reduce the size of digit primordia and underlie the subsequent loss of phalanges and reduction of metacarpals/metatarsals in hd rats.