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Rett syndrome (RTT) is a severe neurodevelopmental disorder with features of autism that results from mutation of the gene encoding the transcriptional repressor methyl-CpG binding protein (MECP2). The consequences of loss of a transcription factor may be complex, affecting the expression of many proteins, thus limiting understanding of this class of diseases and impeding therapeutic strategies. This is true for RTT. Neither the cell biological mechanism(s) nor the developmental stage affected by MECP2 deficiency is known. In vivo analysis of the olfactory system demonstrates that Mecp2 deficiency leads to a transient delay in the terminal differentiation of olfactory neurons. This delay in maturation disrupts axonal targeting in the olfactory bulb, resulting in abnormal axonal projections, subglomerular disorganization, and a persistent reduction in glomerular size. These results indicate a critical cell biological function for Mecp2 in mediating the final stages of neuronal development.