The spontaneous mouse grey-lethal (gl) mutation is responsible for a coat color defect and for the development of the most severe autosomal recessive form of osteopetrosis. Using a positional cloning approach, we have mapped and isolated the gl locus from a ∼1.5 cM genetic interval. The gl locus was identified in a bacterial artificial chromosome (BAC) contig by functional genetic complementation in transgenic mice. Genomic sequence analysis revealed that the gl mutation is a deletion resulting in complete loss of function. The unique ∼3 kb wild-type transcript is expressed primarily in osteoclasts and melanocytes as well as in brain, kidney, thymus and spleen. The gl gene is predicted to encode a 338–amino acid type I transmembrane protein that localizes to the intracellular compartment. Mutation in the human GL gene leads to severe recessive osteopetrosis. Our studies show that mouse Gl protein function is absolutely required for osteoclast and melanocyte maturation and function.