The development of ectodermal organs requires signalling by ectodysplasin (Eda), a tumor necrosis factor (TNF) family member, its receptor Edar and downstream activation of the nuclear factor kappaB (NF-kappa B) transcription factor. In humans, mutations in the Eda pathway components cause hypohidrotic ectodermal dysplasia, a syndrome characterized by missing teeth, sparse hair and defects in sweat glands. It has been postulated that Eda acts redundantly with another TNF pathway to regulate ectodermal organogenesis. A potential candidate is Troy (or TNFRSF19 or Taj), a TNF receptor which is homologous with Edar in its ligand-binding domain, and is expressed in an overlapping pattern. We have characterized Troy null mice and crossed them with Eda-deficient mice. Single Troy mutants had no defects in ectodermal organs. Analysis of the double mutants revealed an essential role for Troy in hair follicle development. In mice, hair follicles develop in three different waves. Only primary hair follicles are missing in Eda single mutants, whereas the compound mutants lacked also the follicles of the second wave, as well as all hair follicles in the middle of crown leading to focal alopecia. Assessment of NF-kappa B activity with a transgenic reporter construct indicated that Eda is the main activator of NF-kappa B signalling in developing skin appendages and surprisingly that the functional overlap of Troy and Eda signalling pathways is mediated by NF-kappa B independent pathways.