Mice carrying a targeted disruption of BmprIB were generated by homologous recombination in embryonic stem cells. BmprIB(−/−) mice are viable and, in spite of the widespread expression of BMPRIB throughout the developing skeleton, exhibit defects that are largely restricted to the appendicular skeleton. Using molecular markers, we show that the initial formation of the digital rays occurs normally in null mutants, but proliferation of prechondrogenic cells and chondrocyte differentiation in the phalangeal region are markedly reduced. Our results suggest that BMPRIB-mediated signaling is required for cell proliferation after commitment to the chondrogenic lineage. Analyses of BmprIB and Gdf5 single mutants, as well as BmprIB; Gdf5 double mutants suggests that GDF5 is a ligand for BMPRIB in vivo. BmprIB; Bmp7 double mutants were constructed in order to examine whether BMPRIB has overlapping functions with other type I BMP receptors. BmprIB; Bmp7 double mutants exhibit severe appendicular skeletal defects, suggesting that BMPRIB and BMP7 act in distinct, but overlapping pathways. These results also demonstrate that in the absence of BMPRIB, BMP7 plays an essential role in appendicular skeletal development. Therefore, rather than having a unique role, BMPRIB has broadly overlapping functions with other BMP receptors during skeletal development.