Signaling pathways activated by extracellular growth and differentiation factors including fibroblast growth factors (FGFs) and bone morphogenetic proteins (BMPs) regulate multiple processes in the development of the skeleton, such as skeletal patterning, chondrogenesis, cartilage development and endochondral ossification. On a cellular level, these signaling pathways regulate cell cycle progression, apoptosis, migration, adhesion and changes in gene expression associated with differentiation. Mutations in the components of these signaling pathways cause skeletal malformations, disorders or increased susceptibility to injury or disease. We study signaling and gene regulation in the FGF and BMP pathways in order to build a knowledge base of the molecular regulation of skeletal development conducive to the advent of novel strategies such as gene therapy and tissue engineering for the treatment of diseases and disorders that affect the skeletal system. Cartilages of the craniofacial region are largely derived from cranial neural crest cells, a specialized population of ectodermal cells that arise from the lateral margin of the developing hindbrain and transdifferentiate into mesenchymal cells. In previous studies, we have demonstrated that crest cells prior to transdifferentiation are responsive to BMP4. BMP4 induces the expression of the homeodomain transcription factor Msx2 that mediates apoptosis in this cell type. Our recent studies showed that at a later stage, Msx2 functions as a repressor of chondrogenesis without inducing apoptosis. We observed Msx2 and Sox9 co-expression in crest cells that transdifferentiate and begin to migrate away from the neural tube. Since the Sox9 transcription factor is known to promote chondrogenesis, Sox9 expression indicates the determination of the crest cell-derived chondrogenic cell lineage. Since Msx genes can act as transcriptional repressors, we hypothesized that Msx2 represses chondrogenic differentiation until cell migration is completed within the developing mandibular processes. We showed that infection of migratory crest cells with adenovirus expressing Msx2 mutants accelerated the rate and extent of chondrogenesis, as indicated by increased expression of type II collagen and aggrecan, and increased alcian blue staining. This suggests that inhibition of Msx2 function promotes chondrocyte differentiation in migratory neural crest cells. We conclude that Msx2 serves to repress the function of Sox9 such that these cells are allowed to migrate and arrive at their target site before overt differentiation occurs. We have previously identified mouse and human homologues of the Drosophila dachshund gene (Dach1), and we have demonstrated that several FGFs are limiting factors in the regulation of Dach1 expression in mouse embryonic limb buds. Dach1 is expressed in several distinct cell types in multiple organs of the developing mouse embryo including podocytes in the developing kidneys, hair cells in the developing cochleae and mesenchymal and epithelial cells in the distal margin of the developing limb buds. In order to investigate possible associations of the human DACH gene with inherited developmental disorders, we characterized the genomic structure of this gene, which is encoded by 12 exons spanning 400 kb on chromosome 13q21-q22. We determined genetic linkage of the limb malformation Postaxial Polydactyly type A2 (PAP-A2, MIM 602085) to an interval on chromosome 13 that contains the DACH gene. Despite this linkage data and the importance of FGF signaling in limb bud development, we did not identify any mutations in the DACH gene in members of the PAP-A2 pedigree. We conclude that Dach1 is a target of the FGF signaling pathway that may function in the normal development of mammalian limbs, kidneys, cochleae and other structures, however we have excluded mutations in the coding regions of this gene as a cause for PAP-A2. Further investigation of the function of Dach1, Msx2 and Sox9 will contribute to an understanding of cellular processes induced by FGF and BMP signaling that regulate skeletal development.