Indian Hedgehog (Ihh) regulates chondrocyte and osteoblast differentiation through the Glioma-associated oncogene homolog (Gli) transcription factors. Previous in vitro studies suggested that Speckletype POZ protein (Spop), part of the Cullin-3 (Cul3) ubiquitin ligase complex, targets Gli2 and Gli3 for degradation and negatively regulates Hedgehog (Hh) signaling. In this study, we found defects in chondrocyte and osteoblast differentiation in Spop-null mutant mice. Strikingly, both the full-length and repressor forms of Gli3, but not Gli2, were up-regulated in Spop mutants, and Ihh target genes Patched 1 (Ptch1) and parathyroid hormone-like peptide (Pthlh) were down-regulated, indicating compromised Hh signaling. Consistent with this finding, reducing Gli3 dosage greatly rescued the Spop mutant skeletal defects. We further show that Spop directly targets the Gli3 repressor for ubiquitination and degradation. Finally, we demonstrate in a conditional mutant that loss of Spop results in brachydactyly and osteopenia, which can be rescued by reducing the dosage of Gli3. In summary, Spop is an important positive regulator of Ihh signaling and skeletal development.T he human skeleton provides essential mechanical support, mobility, and mineral storage critical for health (1). In development, most bones form through endochondral ossification in which chondrocytes in the growth plate proliferate, undergo hypertrophic differentiation, and secrete calcium-containing extracellular matrix (2). The osteoblasts in the perichondrium, a thin layer of tissue surrounding the cartilage, replace the dying chondrocytes and secrete more bone matrix. On the other hand, osteoclasts, derived from white blood cells, invade and digest bone matrix. The balance between the osteoblast and osteoclast activities allows calcium homeostatic control and bone health. In osteopenia and osteoporosis, conditions afflicting more than 10 million Americans, an abnormal decrease in osteoblast activity or increase in osteoclast activity results in the loss of bone mass (1, 3). Unfortunately, our understanding of these bone diseases has been hindered by incomplete knowledge in the molecular mechanisms underlying endochondral bone development and remodeling.Indian Hedgehog (Ihh), a member of the Hedgehog (Hh) family of signaling proteins, is essential for endochondral bone development (4). Ihh regulates gene expression through the Gli family of transcription factors, which act as both transcriptional activators and repressors (5). In the absence of Hh, efficient proteolytic processing turns Gli3 into a transcriptional repressor (Gli3R) whereas processing of Gli2 is rather inefficient (6-8). Hh inhibits Gli processing and converts the full-length Gli proteins into transcriptional activators. Both Gli2 and Gli3 play important roles in the regulation of bone formation downstream of Ihh (9-12).Ihh maintains the expression of parathyroid hormone-like peptide (Pthlh) (Mouse Genome Informatics) in the periarticular perichondrium (13), which then stimulates the prol...