The mouse genome contains two Sim genes, Sim1 and Sim2. They are presumed to be important for central nervous system (CNS) development because they are homologous to the Drosophila single-minded (sim) gene, mutations in which cause a complete loss of CNS midline cells. In the mammalian CNS, Sim2 and Sim1 are coexpressed in the paraventricular nucleus (PVN). While Sim1 is essential for the development of the PVN (J. L. Michaud, T. Rosenquist, N. R. May, and C.-M. Fan, Genes Dev. 12:3264-3275, 1998), we report here that Sim2 mutant has a normal PVN. Analyses of the Sim1 and Sim2 compound mutants did not reveal obvious genetic interaction between them in PVN histogenesis. However, Sim2 mutant mice die within 3 days of birth due to lung atelectasis and breathing failure. We attribute the diminished efficacy of lung inflation to the compromised structural components surrounding the pleural cavity, which include rib protrusions, abnormal intercostal muscle attachments, diaphragm hypoplasia, and pleural mesothelium tearing. Although each of these structures is minimally affected, we propose that their combined effects lead to the mechanical failure of lung inflation and death. Sim2 mutants also develop congenital scoliosis, reflected by the unequal sizes of the left and right vertebrae and ribs. The temporal and spatial expression patterns of Sim2 in these skeletal elements suggest that Sim2 regulates their growth and/or integrity.