Recessive mutations in FKBP10 at 17q21.2, encoding FKBP65, cause both osteogenesis imperfecta (OI) and Bruck syndrome (OI plus congenital contractures). Contractures are a variable manifestation of null/missense FKBP10 mutations. Kuskokwim syndrome (KS) is an autosomal recessive congenital contracture disorder found among Yup'ik Eskimos. Linkage mapping of KS to chromosome 17q21, together with contractures as a feature of FKBP10 mutations, made FKBP10 a candidate gene. We identified a homozygous three-nucleotide deletion in FKBP10 (c.877_879delTAC) in multiple Kuskokwim pedigrees; 3% of regional controls are carriers. The mutation deletes the highly conserved p.Tyr293 residue in FKBP65's third peptidyl-prolyl cis–trans isomerase domain. FKBP10 transcripts are normal, but mutant FKBP65 is destabilized to a residual 5%. Collagen synthesized by KS fibroblasts has substantially decreased hydroxylation of the telopeptide lysine crucial for collagen cross-linking, with 2%–10% hydroxylation in probands versus 60% in controls. Matrix deposited by KS fibroblasts has marked reduction in maturely cross-linked collagen. KS collagen is disorganized in matrix, and fibrils formed in vitro had subtle loosening of monomer packing. Our results imply that FKBP10 mutations affect collagen indirectly, by ablating FKBP65 support for collagen telopeptide hydroxylation by lysyl hydroxylase 2, thus decreasing collagen cross-links in tendon and bone matrix. FKBP10 mutations may also underlie other arthrogryposis syndromes.