Retinoic acid (RA) plays important roles in diverse biological processes ranging from germ cell specification to limb patterning. RA ultimately exerts its effect in the nucleus, but how RA levels are being generated and maintained locally is less clear. Here, we have analyzed the zebrafish stocksteif mutant, which exhibits severe over-ossification of the entire vertebral column. stocksteif encodes cyp26b1, a cytochrome P450 member that metabolizes RA. The mutant is completely phenocopied by treating 4 dpf wild-type embryos with either RA or the pharmacological Cyp26 blocker R115866, thus identifying a previously unappreciated role for RA and cyp26b1 in osteogenesis of the vertebral column. Cyp26b1 is expressed within osteoblast cells, demonstrating that RA levels within these cells need to be tightly controlled. Furthermore, we have examined the effect of RA on osteoblasts in vivo. As numbers of osteoblasts do not change upon RA treatment, we suggest that RA causes increased activity of axial osteoblasts, ultimately resulting in defective skeletogenesis.