Sclerosteosis is a rare bone dysplasia characterized by greatly increased bone mass, especially of the long bones and the skull. Patients are tall, show facial asymmetry and often have syndactyly. Clinical complications are due to entrapment of cranial nerves. The disease is thought to be due to loss-of-function mutations in the SOST gene. The SOST gene product, sclerostin, is secreted by osteocytes and transported to the bone surface where it inhibits osteoblastic bone formation by antagonizing Wnt signaling. In a small Turkish family with sclerosteosis, we identified a missense mutation (c.499T>C; p.Cys167Arg) in exon 2 of the SOST gene. This type of mutation has not been previously reported and using different functional approaches, we show that it has a devastating effect on the biological function of sclerostin. The affected cysteine is the last cysteine residue of the cystine-knot motif and loss of this residue leads to retention of the mutant protein in the ER, possibly as a consequence of impaired folding. Together with a significant reduced ability to bind to LRP5 and inhibit Wnt signaling, the p.Cys167Arg mutation leads to a complete loss of function of sclerostin and thus to the characteristic sclerosteosis phenotype. © 2010 Wiley-Liss, Inc.