We have identified an ethylnitrosourea (ENU)-induced recessive mouse mutation (Vcc) with a pleiotropic phenotype that includes cardiac, tracheoesophageal, anorectal, anteroposterior patterning defects, exomphalos, hindlimb hypoplasia, a presacral mass, renal and palatal agenesis, and pulmonary hypoplasia. It results from a C470R mutation in the proprotein convertase PCSK5 (PC5/6). Compound mutants (Pcsk5(Vcc/null)) completely recapitulate the Pcsk5(Vcc/Vcc) phenotype, as does an epiblast-specific conditional deletion of Pcsk5. The C470R mutation ablates a disulfide bond in the P domain, and blocks export from the endoplasmic reticulum and proprotein convertase activity. We show that GDF11 is cleaved and activated by PCSK5A, but not by PCSK5A-C470R, and that Gdf11-deficient embryos, in addition to having anteroposterior patterning defects and renal and palatal agenesis, also have a presacral mass, anorectal malformation, and exomphalos. Pcsk5 mutation results in abnormal expression of several paralogous Hox genes (Hoxa, Hoxc, and Hoxd), and of Mnx1 (Hlxb9). These include known Gdf11 targets, and are necessary for caudal embryo development. We identified nonsynonymous mutations in PCSK5 in patients with VACTERL (vertebral, anorectal, cardiac, tracheoesophageal, renal, limb malformation OMIM 192350) and caudal regression syndrome, the phenotypic features of which resemble the mouse mutation. We propose that Pcsk5, at least in part via GDF11, coordinately regulates caudal Hox paralogs, to control anteroposterior patterning, nephrogenesis, skeletal, and anorectal development.