The semidominant Danforth's short tail (Sd) mutation arose spontaneously in the 1920s. The homozygous Sd phenotype includes severe malformations of the axial skeleton with an absent tail, kidney agenesis, anal atresia, and persistent cloaca. The Sd mutant phenotype mirrors features seen in human caudal malformation syndromes including urorectal septum malformation, caudal regression, VACTERL association, and persistent cloaca. The Sd mutation was previously mapped to a 0.9 cM region on mouse chromosome 2qA3. We performed Sanger sequencing of exons and intron/exon boundaries mapping to the Sd critical region and did not identify any mutations. We then performed DNA enrichment/capture followed by next-generation sequencing (NGS) of the critical genomic region. Standard bioinformatic analysis of paired-end sequence data did not reveal any causative mutations. Interrogation of reads that had been discarded because only a single end mapped correctly to the Sd locus identified an early transposon (ETn) retroviral insertion at the Sd locus, located 12.5 kb upstream of the Ptf1a gene. We show that Ptf1a expression is significantly upregulated in Sd mutant embryos at E9.5. The identification of the Sd mutation will lead to improved understanding of the developmental pathways that are misregulated in human caudal malformation syndromes.