Signal peptide-CUB-EGF domain-containing protein 3 (SCUBE3) is a member of a small family of multifunctional cell surface-anchored glycoproteins functioning as co-receptors for a variety of growth factors. Here we report that bi-allelic inactivating variants in SCUBE3 have pleiotropic consequences on development and cause a previously unrecognized syndromic disorder. Eighteen affected individuals from nine unrelated families showed a consistent phenotype characterized by reduced growth, skeletal features, distinctive craniofacial appearance, and dental anomalies. In vitro functional validation studies demonstrated a variable impact of disease-causing variants on transcript processing, protein secretion and function, and their dysregulating effect on bone morphogenetic protein (BMP) signaling. We show that SCUBE3 acts as a BMP2/BMP4 co-receptor, recruits the BMP receptor complexes into raft microdomains, and positively modulates signaling possibly by augmenting the specific interactions between BMPs and BMP type I receptors. Scube3−/− mice showed craniofacial and dental defects, reduced body size, and defective endochondral bone growth due to impaired BMP-mediated chondrogenesis and osteogenesis, recapitulating the human disorder. Our findings identify a human disease caused by defective function of a member of the SCUBE family, and link SCUBE3 to processes controlling growth, morphogenesis, and bone and teeth development through modulation of BMP signaling.