Autosomal recessive hereditary motor and sensory neuropathy or Charcot-Marie-Tooth disease (CMT) is a severe childhood-onset neuromuscular disorder. Autosomal recessive CMT is genetically heterogeneous with one locus mapped to chromosome 11p15 (CMT4B2). The histopathological hallmarks of CMT4B2 are focal outfoldings of myelin in nerve biopsies. Homozygosity mapping, in a Turkish inbred family with four children affected by CMT characterized by focally folded myelin, provided linkage to the CMT4B2 locus. We identified a large, novel gene, named SET binding factor 2 (SBF2), that lies within this interval and is expressed in various tissues, including spinal cord and peripheral nerve. SBF2 is a member of the pseudo-phosphatase branch of myotubularins and was an obvious candidate for CMT4B2 by virtue of its striking homology to myotubularin-related protein 2 (MTMR2), causing another form of autosomal recessive CMT with outfoldings of the myelin sheaths. Molecular study of the SBF2 gene in the CMT4B family demonstrated the presence of a homozygous inframe deletion of SBF2 exons 11 and 12 in all four affected individuals. On the protein level, this mutation is predicted to disrupt an N-terminal domain that is conserved in SBF2 and its orthologues across species. Myotubularin-related proteins have been suggested to work in phosphoinositide-mediated signalling events that may also convey control of myelination. Localization of SBF2 within the candidate interval, cosegregation with the disease, expression in the peripheral nervous system, and resemblance of the histopathological phenotype to that related to mutations in its paralogue MTMR2 indicate that this gene is the CMT4B2 gene.