The mouse Shox2 gene codes for a homeodomain transcription factor that is required to form the proximal bones of the limbs, the humerus and femur. Shox2 is the only gene known to be essential for the specific development of these skeletal elements. Shox2 is also of special interest because it is closely related to the human SHOX gene, deficiencies of which cause the short stature in Turner, Langer and Léri-Weill syndromes. In order to understand in more detail the development of the proximal limb, we searched for Shox2-dependent gene expression patterns using Affymetrix microarrays. We compared the mRNA of Shox2-mutant and wild-type forelimb buds at 10.5 and 11.5 days of embryonic development (E10.5 and E11.5) and successfully identified a set of genes whose wild-type expression pattern requires Shox2 function, as confirmed by in situ hybridization for eleven of the candidates. Strikingly, several of the identified genes were predicted to have functions in tissues other than the skeleton, including nerves and muscle precursors, prompting us to analyze neural and muscular patterning in Shox2 mutants. We report here an axonal migration defect in Shox2 mutants resulting in a profound innervation deficiency of the dorsal forelimb, including the complete absence of the radial and axillary nerves. Muscular development was also altered as early as E11.5. Specifically, the triceps muscles that develop along the posterior face of the humerus had severe abnormalities. These data demonstrate that Shox2 is required for normal skeletal, neural and muscular development in the forelimb at a similar early developmental stage in each tissue.