In the vertebrate limb over 40 muscles are arranged in a precise pattern of attachment via muscle connective tissue and tendon to bone and provide an extensive range of motion. How the development of somite-derived muscle is coordinated with the development of lateral plate-derived muscle connective tissue, tendon and bone to assemble a functional limb musculoskeletal system is a long-standing question. Mutations in the T-box transcription factor, TBX3, have previously been identified as the genetic cause of ulnar-mammary syndrome (UMS), characterized by distinctive defects in posterior forelimb bones. Using conditional mutagenesis in mice, we now show that TBX3 has a broader role in limb musculoskeletal development. TBX3 is not only required for development of posterior forelimb bones (ulna and digits 4 and 5), but also for a subset of posterior muscles (lateral triceps and brachialis) and their bone eminence attachment sites. TBX3 specification of origin and insertion sites appears to be tightly linked with whether these particular muscles develop and may represent a newly discovered mechanism for specification of anatomical muscles. Re-examination of an individual with UMS reveals similar previously unrecognized muscle and bone eminence defects and indicates a conserved role for TBX3 in regulating musculoskeletal development.