Abstract The paralogous genes Pax1 and Pax9 constitute one group within the vertebrate Pax gene family. They encode closely related transcription factors and are expressed in similar patterns during mouse embryogenesis, suggesting that Pax1 and Pax9 act in similar developmental pathways. We have recently shown that mice homozygous for a defined Pax1 null allele exhibit morphological abnormalities of the axial skeleton, which is not affected in homozygous Pax9 mutants. To investigate a potential interaction of the two genes, we analysed Pax1/Pax9 double mutant mice. These mutants completely lack the medial derivatives of the sclerotomes, the vertebral bodies, intervertebral discs and the proximal parts of the ribs. This phenotype is much more severe than that of Pax1 single homozygous mutants. In contrast, the neural arches, which are derived from the lateral regions of the sclerotomes, are formed. The analysis of Pax9 expression in compound mutants indicates that both spatial expansion and upregulation of Pax9 expression account for its compensatory function during sclerotome development in the absence of Pax1. In Pax1/Pax9 double homozygous mutants, formation and anteroposterior polarity of sclerotomes, as well as induction of a chondrocyte-specific cell lineage, appear normal. However, instead of a segmental arrangement of vertebrae and intervertebral disc anlagen, a loose mesenchyme surrounding the notochord is formed. The gradual loss of Sox9 and Collagen II expression in this mesenchyme indicates that the sclerotomes are prevented from undergoing chondrogenesis. The first detectable defect is a low rate of cell proliferation in the ventromedial regions of the sclerotomes after sclerotome formation but before mesenchymal condensation normally occurs. At later stages, an increased number of cells undergoing apoptosis further reduces the area normally forming vertebrae and intervertebral discs. Our results reveal functional redundancy between Pax1 and Pax9 during vertebral column development and identify an early role of Pax1 and Pax9 in the control of cell proliferation during early sclerotome development. In addition, our data indicate that the development of medial and lateral elements of vertebrae is regulated by distinct genetic pathways.