We have generated mice carrying a mutation of the gene encoding the low affinity NGF receptor p75NGFR by targeted mutation in embryonic stem cells. Mice homozygous for the mutation were viable and fertile. Immunohistochemical analyses of the footpad skin of mutant mice revealed markedly decreased sensory innervation by calcitonin gene-related peptide- and substance P-immunoreactive fibers. The defective innervation was correlated with loss of heat sensitivity and associated with the development of ulcers in the distal extremities. Complicated by secondary bacterial infection, the ulcers progressed to toenail and hair loss. Crossing a human transgene encoding p75NGFR into the mutant animals rescued the absent heat sensitivity and the occurrence of skin ulcers and increased the density of neuropeptide-immunoreactive sensory innervation of footpad skin. The mutation in the gene encoding p75NGFR did not decrease the size of sympathetic ganglia or the density of sympathetic innervation of the iris or salivary gland. Our results suggest that p75NGFR has an important role in the development and function of sensory neurons.