Microphthalmia with limb anomalies (MLA) is a rare autosomal-recessive disorder, presenting with anophthalmia or microphthalmia and hand and/or foot malformation. We mapped the MLA locus to 14q24 and successfully identified three homozygous (one nonsense and two splice site) mutations in the SPARC (secreted protein acidic and rich in cysteine)-related modular calcium binding 1 (SMOC1) in three families. Smoc1 is expressed in the developing optic stalk, ventral optic cup, and limbs of mouse embryos. Smoc1 null mice recapitulated MLA phenotypes, including aplasia or hypoplasia of optic nerves, hypoplastic fibula and bowed tibia, and syndactyly in limbs. A thinned and irregular ganglion cell layer and atrophy of the anteroventral part of the retina were also observed. Soft tissue syndactyly, resulting from inhibited apoptosis, was related to disturbed expression of genes involved in BMP signaling in the interdigital mesenchyme. Our findings indicate that SMOC1/Smoc1 is essential for ocular and limb development in both humans and mice.