Human craniosynostosis syndromes, resulting from activating or neomorphic mutations in fibroblast growth factor receptor 2 (FGFR2), underscore an essential role for FGFR2 signaling in skeletal development. Embryos harboring homozygous null mutations in FGFR2 die prior to skeletogenesis. To address the role of FGFR2 in normal bone development, a conditional gene deletion approach was adopted. Homologous introduction of cre recombinase into the Dermo1 (Twist2) gene locus resulted in robust expression of CRE in mesenchymal condensations giving rise to both osteoblast and chondrocyte lineages. Inactivation of a floxed Fgfr2 allele with Dermo1-cre resulted in mice with skeletal dwarfism and decreased bone density. Although differentiation of the osteoblast lineage was not disturbed,the proliferation of osteoprogenitors and the anabolic function of mature osteoblasts were severely affected.