The discovery may lead at last to a definitive posthumous diagnosis of the painter, known for dark portraits of cafes and cabarets in which the tiny, tormented artist often made his subjects look more deformed than he was himself.
Scientists at New York's Mount Sinai Hospital, tracking the disorder in an Israeli Arab family, and a separate team at the US National Institutes of Health, studying a Mexican family, have found genetic indications - called "markers" - for a form of dwarfism known as pycnodysostosis. They have not yet isolated the gene itself.
The scientists hope the research, presented in the June edition of Nature Genetics, leads to a pre-natal screening test or even some day to corrective gene therapy. They also hope it sheds light on disorders involving bone formation.
As far back as 1962, two French doctors, Pierre Maro-teaux and M Lamy theorised that Toulouse-Lautrec, who died of alcoholism aged 36, suffered from pycnodysostosis.
Dr Bruce Gelb, working with Dr Robert Desnick at Mount Sinai, said the painter's relatives have thus far not seemed eager to exhume him for research. But since there was a fair amount of inbreeding in his family of French aristocrats, genetic tests on his cousins' surviving children could determine if the mutation runs in the family.
Toulouse-Lautrec's biographer, Julia Frey of the University of Colorado, questions in an accompanying essay in the journal whether his short stature was caused by this genetic defect or had some other origin.
He had some of the characteristics of pycnodysostosis, including shortness and a tendency to fracture bones, but did not have others like a bulging, misshapen skull and receding chin.