Cdc42, a member of the Rho subfamily of small GTPases, is known to be a regulator of multiple cellular functions, including cytoskeletal organization, cell migration, proliferation, and apoptosis. However, its tissue-specific roles, especially in mammalian limb development, remain unclear. To investigate the physiological function of Cdc42 during limb development, we generated limb bud mesenchyme-specific inactivated Cdc42 (Cdc42^fl/fl; Prx1-Cre) mice. Cdc42^fl/fl; Prx1-Cre mice demonstrated short limbs and body, abnormal calcification of the cranium, cleft palate, disruption of the xiphoid process, and syndactyly. Severe defects were also found in long bone growth plate cartilage, characterized by loss of columnar organization of chondrocytes, and thickening and massive accumulation of hypertrophic chondrocytes, resulting in delayed endochondral bone formation associated with reduced bone growth. In situ hybridization analysis revealed that expressions of Col10 and Mmp13 were reduced in non-resorbed hypertrophic cartilage, indicating that deletion of Cdc42 inhibited their terminal differentiation. Syndactyly in Cdc42^fl/fl; Prx1-Cre mice was caused by fusion of metacarpals and a failure of interdigital programmed cell death (ID-PCD). Whole mount in situ hybridization analysis of limb buds showed that the expression patterns of Sox9 were ectopic, while those of Bmp2, Msx1, and Msx2, known to promote apoptosis in the interdigital mesenchyme, were down-regulated. These results demonstrate that Cdc42 is essential for chondrogenesis and ID-PCD during limb development.