A spontaneous mouse mutant, designated ‘small’ (sml), was recognized by reduced body size suggesting a defect in the IGF1/GH axis. The mutation was mapped to the chromosome 1 region containing Irs1, a viable candidate gene whose sequence revealed a single nucleotide deletion resulting in a premature stop codon. Despite normal mRNA levels in mutant and control littermate livers, western blot analysis revealed no detectable protein in mutant liver lysates. When compared with the control littermates, Irs1 ^sml /Irs1 ^sml (Irs1 ^sml/sml ) mice were small, lean, hearing impaired; had 20% less serum IGF1; were hyperinsulinemic; and were mildly insulin resistant. Irs1 ^sml/sml mice had low bone mineral density, reduced trabecular and cortical thicknesses, and low bone formation rates, while osteoblast and osteoclast numbers were increased in the females but not different in the males compared with the Irs1 ^+/+ controls. In vitro, Irs1 ^sml/sml bone marrow stromal cell cultures showed decreased alkaline phosphatase-positive colony forming units (pre-osteoblasts; CFU-AP+) and normal numbers of tartrate-resistant acid phosphatase-positive osteoclasts. Irs1 ^sml/sml stromal cells treated with IGF1 exhibited a 50% decrease in AKT phosphorylation, indicative of defective downstream signaling. Similarities between engineered knockouts and the spontaneous mutation of Irs1 ^sml were identified as well as significant differences with respect to heterozygosity and gender. In sum, we have identified a spontaneous mutation in the Irs1 gene associated with a major skeletal phenotype. Changes in the heterozygous Irs1 ^{+ /sml} mice raise the possibility that similar mutations in humans are associated with short stature or osteoporosis.