Gene-targeted disruption of Grg5, a mouse homologue of Drosophila groucho (gro), results in postnatal growth retardation in mice. The growth defect, most striking in approximately half of the Grg5 null mice, occurs during the first 4–5 weeks of age, but most mice recover retarded growth later. We used the nonlinear mixed-effects model to fit the growth data of wild-type, heterozygous, and Grg5 null mice. On the basis of preliminary evidence suggesting an interaction between Grg5 and the transcription factor Cbfa1/Runx2, critical for skeletal development, we further investigated the skeleton in the mice. A long bone growth plate defect was identified, which included shorter zones of proliferative and hypertrophic chondrocytes and decreased trabecular bone formation. This decreased trabecular bone formation is likely caused by a reduced recruitment of osteoblasts into the growth plate region of Grg5 null mice. Like the growth defect, the growth plate and trabecular bone abnormality improved as the mice grew older. The growth plate defect was associated with reduced Indian hedgehog expression and signaling. We suggest that Grg5, a transcriptional coregulator, modulates the activities of transcription factors, such as Cbfa1/Runx2 in vivo to affect Ihh expression and the function of long bone growth plates. © 2002 Wiley-Liss, Inc.