EVC is a novel protein mutated in the human chondroectodermal dysplasia Ellis-van Creveld syndrome (EvC; OMIM: 225500). We have inactivated Evc in the mouse and show that Evc-/- mice develop an EvC-like syndrome, including short ribs, short limbs and dental abnormalities. lacZ driven by the Evc promoter revealed that Evc is expressed in the developing bones and the orofacial region. Antibodies developed against Evc locate the protein at the base of the primary cilium. The growth plate of Evc-/- mice shows delayed bone collar formation and advanced maturation of chondrocytes. Indian hedgehog(Ihh) is expressed normally in the growth plates of Evc-/- mice, but expression of the Ihh downstream genes Ptch1 and Gli1 was markedly decreased. Recent studies have shown that Smo localises to primary cilia and that Gli3 processing is defective in intraflagellar transport mutants. In vitro studies using Evc-/- cells demonstrate that the defect lies downstream of Smo. Chondrocyte cilia are present in Evc-/- mice and Gli3 processing appears normal by western blot analysis. We conclude that Evc is an intracellular component of the hedgehog signal transduction pathway that is required for normal transcriptional activation of Ihh target genes.