Myostatin is a potent inhibitor of muscle growth. Genetic deletion of Myostatin leads to massive hyperplasia and hypertrophy of skeletal muscle. However, the overall muscle pattern is preserved. We show that, during chick embryonic development, Myostatin is expressed at stages and positions unlikely to influence qualitative muscle development. In the somites, Myostatin is predominantly expressed in a central domain of the dermomyotome but not at the dorsomedial and ventrolateral lips, where most cells for myotomal elongation are recruited. During limb bud development, Myostatin is transiently expressed at early stages in both myogenic and nonmyogenic regions. Myostatin is reexpressed during limb bud development at a time when splitting of muscle is underway. Heterotopically developed wing buds that fail to form muscle still express Myostatin. This demonstrates that, in the limb, not all Myostatin-expressing cells are of myogenic origin. Ectoderm and Sonic hedgehog have different effects on the expression of Myostatin dependent on stages at which the operation was performed and the length of the postoperative period. Finally, we show that application of Myostatin protein into the developing limb bud results in a down-regulation of Pax-3 and Myf-5, both genes associated with proliferation of myogenic cells; and, furthermore, Myostatin also prevents the expression of MyoD, a gene associated with muscle differentiation. The long-term effect of Myostatin treatment leads to a deficiency of limb muscle. Therefore, Myostatin negatively affects gene expression of transcription factors, which are necessary for establishing myogenic cell identity.