Adrenocortical dysplasia (acd) is a spontaneous autosomal recessive mouse mutation that exhibits a pleiotropic phenotype with perinatal lethality. Mutant acd embryos have caudal truncation, vertebral segmentation defects, hydronephrosis, and limb hypoplasia, resembling humans with Caudal Regression syndrome. Acd encodes Tpp1, a component of the shelterin complex that maintains telomere integrity, and consequently acd mutant mice have telomere dysfunction and genomic instability. While the association between genomic instability and cancer is well documented, the association between genomic instability and birth defects is unexplored. To determine the relationship between telomere dysfunction and embryonic malformations, we investigated mechanisms leading to the caudal dysgenesis phenotype of acd mutant embryos. We report that the caudal truncation is caused primarily by apoptosis, not altered cell proliferation. We show that the apoptosis and consequent skeletal malformations in acd mutants are dependent upon the p53 pathway by genetic rescue of the limb hypoplasia and vertebral anomalies with p53 null mice. Furthermore, rescue of the acd phenotype by p53 deficiency is a dosage-sensitive process, as acd/acd, p53^−/− double mutants exhibit preaxial polydactyly. These findings demonstrate that caudal dysgenesis in acd embryos is secondary to p53-dependent apoptosis. Importantly, this study reinforces a significant link between genomic instability and birth defects.