Deficiencies or mutations in the human pseudoautosomal SHOX gene are associated with a series of short-stature conditions, including Turner syndrome, Leri–Weill dyschondrosteosis, and Langer mesomelic dysplasia. Although this gene is absent from the mouse genome, the closely related paralogous gene Shox2 displays a similar expression pattern in developing limbs. Here, we report that the conditional inactivation of Shox2 in developing appendages leads to a strong phenotype, similar to the human conditions, although it affects a different proximodistal limb segment. Furthermore, using this mouse model, we establish the cellular etiology of these defects and show that Shox2 acts upstream the Runx2 gene, a key regulator of chondrogenesis.