Pallister–Hall syndrome (PHS, MIM #146510) is characterized by central and postaxial polydactyly, hypothalamic hamartoma (HH), bifid epiglottis, imperforate anus, renal abnormalities, and pulmonary segmentation anomalies. It is inherited in an autosomal dominant pattern. Here, we describe a family with two affected children manifesting severe PHS with mental retardation, behavioral problems, and intractable seizures. Both parents are healthy, with normal intelligence, and have no malformations on physical, laryngoscopic, and cranial MRI exam. The atypical presentation of these children and the absence of parental manifestations suggested an autosomal recessive mode of inheritance or gonadal mosaicism. Sequencing of GLI3 revealed a two nucleotide deletion in exon 15 (c.3385_3386delTT) predicting a frameshift and premature stop at codon 1129 (p.F1129X) in the children while both parents have wild type alleles. Genotyping with GLI3 intragenic markers revealed that both children inherited the abnormal allele from their mother thus supporting gonadal mosaicism as the underlying mechanism of inheritance (paternity was confirmed). This is the first reported case of gonadal mosaicism in PHS. The severe CNS manifestations of these children are reminiscent of children with non-syndromic HH who often have progressive mental retardation with behavioral problems and intractable seizures. We conclude that the phenotypic spectrum of PHS can include severe CNS manifestations and that recurrence risks for PHS should include a proviso for gonadal mosaicism, though the frequency cannot be calculated from a single case report. Published 2003 Wiley-Liss, Inc.