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. We have investigated the expression and growth factor regulation of Dach1 during pre- and postnatal skeletal development in the mouse limb to understand better the function of Dach1. Dach1 was expressed in the distal mesenchyme of the early embryonic mouse limb bud and subsequently became restricted to the tips of digital cartilages. Dach1 protein was localized to postmitotic, prehypertrophic, and early hypertrophic chondrocytes during the initiation of ossification centers, but Dach1 was not expressed in growth plates that exhibited extensive ossification. Dach1 colocalized with Runx2/Cbfa1 in chondrocytes but not in the forming bone collar or primary spongiosa. Dach1 also colocalized with cyclin-dependent kinase inhibitors p27 (Kip1) and p57 (Kip2) in chondrocytes of the growth plate and in the epiphysis before the formation of the secondary ossification center. Because 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 days postcoitus mouse limb buds in organ culture was up-regulated by implanting beads soaked in FGF1, 2, 8, or 9 but not FGF10. BMP4-soaked beads down-regulated Dach1 expression, whereas Shh and bovine serum albumin 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 skeletal development, and Dach1 may function as an intermediary in the FGF signaling pathway regulating cell proliferation or differentiation.