The impact of fibroblast growth factor receptor 3 (FGFR3)-mediated signaling on bone growth has been demonstrated by various genetic approaches. Overexpression of fibroblast growth factors (FGF), several gain-of-function mutations in the FGFR3 and constitutive active mitogen-activated protein kinase (MAPK) kinase (MEK1) in chondrocytes have been shown to cause dwarfism in mice by activation of the MAPK signaling pathway. To investigate the previously reported inhibitory role of Spred in this pathway, we generated mice with a trapped Spred-2 gene. Here we show that lack of functional Spred-2 protein caused proportional dwarfism. Spred-2(-/-) mice showed reduced growth and body weight (males: 18 g vs. 23 g at 60 dpn, p < 0.01; n = 10), they had a shorter tibia length (16.1 vs. 18.1 mm in adult mice, p < 0.01; n = 26), and showed narrower growth plates (493 μm ± 80 vs. 599 μm ± 41 at 7 dpn) as compared to wild-type mice. We detected promoter activity and protein expression of Spred-2 in chondrocytes, suggesting an important function of Spred-2 in chondrocyte differentiation and bone development. Stimulation of chondrocytes with different FGF concentrations showed earlier and augmented ERK phosphorylation in Spred-2(-/-) chondrocytes. Furthermore, we observed that adult Spred-2(-/-) mice showed an enhanced scratching behavior (pruritus) and pathologically altered kidneys with chronic pyelitis, cysts, and massive lymphocytic infiltration. The importance of Spred-2 in kidney function was underlined by strong Spred-2 promoter activity and immunoreactivity in the tubular system. We conclude that loss of Spred-2 leads to reduced inhibition of the MAPK pathway which results in pathologic chondrocyte differentiation and kidney failure.