We observed severe ataxia in mice homozygous for modification of the Pparg locus. Genetic analysis and nucleotide sequencing revealed that ataxia is caused by a T692K substitution in plasma membrane calcium ATPase 2 (Pmca2), which is tightly linked to Pparg, but not by modified PPARgamma itself. We traced this mutation and found that it arose spontaneously during clonal expansion of the targeted embryonic stem (ES) cells. Consistent with the deafwaddler phenotype in other Pmca2 mutants, homozygous T692K Pmca2 mutants exhibit severe balance disorder, impaired neurologic reflexes, and motor coordination, and have profound hearing loss. Heterozygous mutants have normal movement and motor function but are severely deficient in hearing. Our findings represent a cautionary example since, although rare, spontaneous mutations do arise in ES cells during culture and hitchhike onto the targeted gene mutation.