Elongation of the digit rays resulting in the formation of a defined number of phalanges is a process poorly understood in mammals, whereas in the chicken distal mesenchymal bone morphogenetic protein (BMP) signaling in the so-called phalanx-forming region (PFR) or digit crescent (DC) seems to be involved. The human brachydactylies (BDs) are inheritable conditions characterized by variable degrees of digit shortening, thus providing an ideal model to analyze the development and elongation of phalanges. We used a mouse model for BDB1 (Ror2(W749X/W749X)) lacking middle phalanges and show that a signaling center corresponding to the chick PFR exists in the mouse, which is diminished in BDB1 mice. This resulted in a strongly impaired elongation of the digit condensations due to reduced chondrogenic commitment of undifferentiated distal mesenchymal cells. We further show that a similar BMP-based mechanism accounts for digit shortening in a mouse model for the closely related condition BDA1 (Ihh(E95K/E95K)), altogether indicating the functional significance of the PFR in mammals. Genetic interaction experiments as well as pathway analysis in BDB1 mice suggest that Indian hedgehog and WNT/beta-catenin signaling, which we show is inhibited by receptor tyrosine kinase-like orphan receptor 2 (ROR2) in distal limb mesenchyme, are acting upstream of BMP signaling in the PFR.