Diastrophic dysplasia (DTD) is a well-characterized autosomal recessive osteochondrodysplasia with clinical features including dwarfism, spinal deformation, and specific joint abnormalities. The disease occurs in most populations, but is particularly prevalent in Finland owing to an apparent founder effect. DTD maps to distal chromosome 5q and, based on linkage disequilibrium studies in the Finnish population, we had previously predicted that the DTD gene should lie about 64 kb away from the CSF1R locus. Here, we report the positional cloning of the DTD gene by fine-structure linkage disequilibrium mapping. The gene lies in the predicted location, approximately 70 kb proximal to CSF1R, and encodes a novel sulfate transporter. Impaired function of its product is likely to lead to undersulfation of proteoglycans in cartilage matrix and thereby to cause the clinical phenotype of the disease. These results demonstrate the power of linkage disequilibrium mapping in isolated populations for positional cloning.