While generating bcl2 alpha transgenic mice, we found some F2 offspring of one of the transgenic lines which were very small and had closed eyes at the time of weaning. These pups died within 1 month after birth. In order to determine the molecular basis of this phenotype, we screened a genomic library of the above transgenic line with a transgene-specific probe and found that the Bmp7 gene, a member of the TGF beta superfamily, was inactivated by insertional mutagenesis due to transgene integration. The Bmp7 homozygous null condition in mice is a postnatal lethal mutation and is associated with various developmental defects: holes in the basisphenoid bone and the xyphoid cartilage, retarded ossification of bones, fused ribs and vertebrae, underdeveloped neural arches of the lumbar and sacral vertebrae, polydactyly of the hind limbs, a kinked tail, a reduced number of nephrons, polycystic kidney, lack of retinal pigmentation, and retarded lens development. These findings indicate that BMP7 is an important signaling molecule for normal development of the mammalian skeleton, kidney, and eye. Academic Press