Dnm3os, a gene that is transcribed into a non‐coding RNA (ncRNA), contains three micro RNAs (miRNAs), miR‐199a, miR‐199a*, and miR‐214, whose functions remain unknown in mammals. In this study, we introduced the lacZ gene into the Dnm3os locus to recapitulate its expression pattern and disrupt its function. Dnm3os^+/lacZ heterozygous embryos showed β‐galactosidase activity, which reflected the authentic expression pattern of Dnm3os RNA. Most of the Dnm3os^lacZ/lacZ homozygous pups died within one month of birth. After birth, Dnm3os^lacZ/lacZ mice exhibited several skeletal abnormalities, including craniofacial hypoplasia, defects in dorsal neural arches and spinous processes of the vertebrae, and osteopenia. Importantly, the expression of miR‐199a, miR‐199a*, and miR‐214 was significantly down‐regulated in Dnm3os^lacZ/lacZ embryos, supporting the assumption that Dnm3os serves as a precursor of these three miRNAs. Thus, Dnm3os has emerged as an miRNA‐encoding gene that is indispensable for normal skeletal development and body growth in mammals. Developmental Dynamics 237:3738–3748, 2008. © 2008 Wiley‐Liss, Inc.