The expression of the homeobox gene Uncx4.1 in the somite is restricted to the caudal half of the newly formed somite and sclerotome. Here we show that mice with a targeted mutation of the Uncx4.1 gene exhibit defects in the axial skeleton and ribs. In the absence of Uncx4.1, pedicles of the neural arches and proximal ribs are not formed. In addition, dorsal root ganglia are disorganized. Histological and marker analysis revealed that Uncx4.1 is not necessary for somite segmentation. It is required to maintain the condensation of the caudal half-sclerotome, from which the missing skeletal elements are derived. The loss of proximal ribs in Pax1/Pax9 double mutants and the data presented here argue for a role of Uncx4.1 upstream of Pax9 in the caudolateral sclerotome. Our results further indicate that Uncx4.1 may be involved in the differential cell adhesion properties of the somite.