Congenital diaphragmatic hernia and other congenital diaphragmatic defects are associated with significant mortality and morbidity in neonates; however, the molecular basis of these developmental anomalies is unknown. In an analysis of E18.5 embryos derived from mice treated with N-ethyl-N-nitrosourea, we identified a mutation that causes pulmonary hypoplasia and abnormal diaphragmatic development. Fog2 (Zfpm2) maps within the recombinant interval carrying the N-ethyl-N-nitrosourea-induced mutation, and DNA sequencing of Fog2 identified a mutation in a splice donor site that generates an abnormal transcript encoding a truncated protein. Human autopsy cases with diaphragmatic defect and pulmonary hypoplasia were evaluated for mutations in FOG2. Sequence analysis revealed a de novo mutation resulting in a premature stop codon in a child who died on the first day of life secondary to severe bilateral pulmonary hypoplasia and an abnormally muscularized diaphragm. Using a phenotype-driven approach, we have established that Fog2 is required for normal diaphragm and lung development, a role that has not been previously appreciated. FOG2 is the first gene implicated in the pathogenesis of nonsyndromic human congenital diaphragmatic defects, and its necessity for pulmonary development validates the hypothesis that neonates with congenital diaphragmatic hernia may also have primary pulmonary developmental abnormalities.