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. Previously, we have identified and characterized that Dach1 is a mouse homologue of the Drosophila dachshund gene, which is a key regulator of cell fate determination during eye, leg and brain development in the fly. Dach1 is expressed in the distal mesenchyme of the early embryonic mouse limb bud and subsequently becomes restricted to the tips of digital cartilages. Signaling pathways that regulate skeletal patterning in the limb bud also regulate chondrocyte proliferation and maturation during endochondral bone development. Therefore we have investigated the expression and growth factor regulation of Dach1 during skeletal development in the mouse limb in order to understand better the function of Dach1 and to determine what signaling pathways regulate its expression. Dach1 protein was localized to postmitotic, prehypertrophic and early hypertrophic chondrocytes in growth plates that had recently initiated chondrocyte hypertropy, but Dach1 was not expressed in growth plates that had established ossification. Dach1 co-localized with Cbfa1 in chondrocytes but not in the forming bone collar or primary spongiosa. Dach1 also co-localized with cyclin dependent kinase inhibitors p27 (Kip1) and p57 (Kip2) in chondrocytes of the growth plate and in the epiphysis prior to the formation of the secondary ossification center. Since fibroblast growth factors (FGF), bone morphogenetic proteins (BMP) and hedgehog molecules (Hh) regulate skeletal patterning of the limb bud and chondrocyte maturation in developing endochondral bones, we investigated the regulation of Dach1 by these growth and differentiation factors. Expression of Dach1 in 11 dpc mouse limb buds in organ culture was upregulated by implanting beads soaked in FGF1, 2, 8, or 9 but not FGF10. BMP4-soaked beads down regulated Dach1 expression while Shh and BSA had no effect. Furthermore, FGF4 or 8 could substitute for the apical ectodermal ridge in maintaining Dach1 expression in the limb buds. Immunolocalization of FGFR2 and FGFR3 revealed overlap with Dach1 expression during skeletal patterning and chondrocyte maturation. We conclude that Dach1 is a target gene of FGF signaling during limb bud outgrowth and patterning, and is co-expressed with FGF receptors that regulate chondrocyte proliferation and maturation in developing endochondral bones. Dach1 may function as an intermediary in the FGF signaling pathway regulating cell proliferation or differentiation.