A new morphogenic secreted protein has been identified with direct evidence for its involvement in skeletal development and joint morphogenesis. Cartilage-derived morphogenetic protein-1 (Cdmp1) and its mouse homologue growth/differentiation factor 5 (Gdf5) were discovered independently using a degenerate PCR screen for bone morphogenetic protein-like genes. Cdmp1/Gdf5 belongs to the TGF-beta superfamily, a large group of signaling molecules that are secreted as biologically active dimers with a carboxyl-terminal domain containing seven highly conserved cysteines. Its temporal and spatial expression pattern is mostly restricted to the developing appendicular skeleton. Genetic studies revealed that effective null mutations in the gene are associated with short limbs, brachypodism (bp) in mice and acromesomelic chondrodysplasia in humans. Recombinantly expressed protein initiates and promotes chondrogenesis and to a limited extent osteogenesis in vitro and in vivo. This makes this polypeptide a potential therapeutic agent in the regeneration of skeletal tissues.