Smallie (slie), a spontaneous, autosomal-recessive mutation causes dwarfing and infertility in mice. The purpose of this study was to determine and characterize the underlying molecular genetic basis for its phenotype. The slie locus was mapped to chromosome 1, and fine-structure mapping narrowed the slie allele within 2 Mb between genetic markers D1Mit36 and Mpz. To pinpoint the underlying mutation quantitative real-time PCR was used to measure the relative expression levels for the genes residing within this region. Expression of one gene, Ddr2, which encodes discoidin domain receptor 2 (DDR2), was absent in slie homozygote mice. Genomic sequencing analysis detected a 150-kb deletion that extended into the Ddr2 gene transcript. Detailed phenotype analysis revealed that gonadal dysregulation underlies infertility in slie mice because all females were anovulatory and most adult males lacked spermatogenesis. The pituitary gland of prepubertal slie mice was smaller than in wild-type mice. The basal levels and gene expression for pituitary and hypothalamic hormones, and gene expression for hypothalamic-releasing hormones, were not significantly different between slie and wild-type mice. Circulating levels of IGF-1 did not differ in slie mice despite lower Igf-1 mRNA expression in the liver. After exogenous gonadotropin administration, the levels of secreted steroid hormones in both male and female adult slie mice were blunted compared to adult wild-type, but was similar to prepubertal wild-type mice. Taken together, our results indicate that the absence of DDR2 leads to growth retardation and gonadal dysfunction due to peripheral defects in hormonal-responsive pathways in slie mice.