A loss-of-function mutation in the mouse delta-like3 (Dll3) gene has been generated following gene targeting, and results in severe axial skeletal defects. These defects, which consist of highly disorganised vertebrae and costal defects, are similar to those associated with the Dll3-dependent pudgy mutant in mouse and with spondylocostal dysplasia (MIM 277300) in humans. This study demonstrates that Dll3(neo) and Dll3(pu) are functionally equivalent alleles with respect to the skeletal dysplasia, and we suggest that the three human DLL3 mutations associated with spondylocostal dysplasia are also functionally equivalent to the Dll3(neo) null allele. Our phenotypic analysis of Dll3(neo)/Dll3(neo) mutants shows that the developmental origins of the skeletal defects lie in delayed and irregular somite formation, which results in the perturbation of anteroposterior somite polarity. As the expression of Lfng, Hes1, Hes5 and Hey1 is disrupted in the presomitic mesoderm, we suggest that the somitic aberrations are founded in the disruption of the segmentation clock that intrinsically oscillates within presomitic mesoderm.