Sclerosteosis is an autosomal recessive sclerosing bone dysplasia characterized by progressive skeletal overgrowth. The majority of affected individuals have been reported in the Afrikaner population of South Africa, where a high incidence of the disorder occurs as a result of a founder effect. Homozygosity mapping in Afrikaner families along with analysis of historical recombinants localized sclerosteosis to an interval of ∼2 cM between the loci D17S1787 and D17S930 on chromosome 17q12-q21. Here we report two independent mutations in a novel gene, termed “SOST.” Affected Afrikaners carry a nonsense mutation near the amino terminus of the encoded protein, whereas an unrelated affected person of Senegalese origin carries a splicing mutation within the single intron of the gene. The SOST gene encodes a protein that shares similarity with a class of cystine knot–containing factors including dan, cerberus, gremlin, prdc, and caronte. The specific and progressive effect on bone formation observed in individuals affected with sclerosteosis, along with the data presented in this study, together suggest that the SOST gene encodes an important new regulator of bone homeostasis.