Adrenocortical dysplasia (acd) is a spontaneous autosomal recessive mouse mutant with developmental defects in organs derived from the urogenital ridge. In surviving adult mutants, adrenocortical dysplasia and hypofunction are predominant features. Adults are infertile due to lack of mature germ cells, and 50% develop hydronephrosis due to ureteral hyperplasia. We report the identification of a splice donor mutation in a novel gene, which is the mouse ortholog of a newly discovered telomeric regulator. This gene (Acd) has recently been characterized as a novel component of the TRF1 protein complex that controls telomere elongation by telomerase. Characterization of Acd transcripts in mutant animals reveals two abnormal transcripts, consistent with a splicing defect. Expression of a wild-type Acd transgene in acd mutants rescues the observed phenotype. Most mutants die within 1-2 days of life on the original genetic background. Analysis of these mutant embryos reveals variable, yet striking defects in caudal specification, limb patterning and axial skeleton formation. In the tail bud, reduced expression of Wnt3a and Dll1 correlates with phenotypic severity of caudal regression. In the limbs, expression of Fgf8 is expanded in the dorsal-ventral axis of the apical ectodermal ridge and shortened in the anterior-posterior axis, consistent with the observed loss of anterior digits in older embryos. The axial skeleton of mutant embryos shows abnormal vertebral fusions in cervical, lumbar and caudal regions. This is the first report to show that a telomeric regulator is required for proper urogenital ridge differentiation, axial skeleton specification and limb patterning in mice.