buttonhead (btd) encodes an SP1-like transcription factor required for the generation and specification of Drosophila head segments. We identified a murine btd homolog, termed mouse Btd (mBtd), which can support btd-dependent head development in transgenic fly embryos. Functional studies show that mBtd-deficient mice develop to term and die at birth. They exhibit brain malformations, posterior axial skeleton truncations, and shortened limbs. We present evidence that mBtd is required during early limb development to maintain, but not to initiate Wnt/-catenin-dependent FGF, Shh, and BMP-mediated signaling. The data indicate that mBtd represents a novel key player mediating proximodistal outgrowth of the limb.Supplemental material is available at http://www.genesdev.org.Received May 30, 2003; revised version accepted September 5, 2003. buttonhead (btd), empty spiracles (ems), and orthodenticles (otd) are required for anterior head development during Drosophila embryogenesis (Cohen and Jürgens 1991;Finkelstein and Boncinelli 1994). The three genes are expressed in overlapping domains at blastoderm stage. btd is required for development of the mandibular, btd and ems for the intercalary, and the combination of btd, ems, and otd for the antennal segment. ems and otx encode homeodomain transcription factors, and btd encodes an Egr-like zinc finger transcription factor (Wimmer et al. 1993).Homologs of ems and otd have been identified in mouse. Functional analysis revealed that they are required for patterning processes during early embryonic brain development (Simeone 2002). A vertebrate homolog of btd has not yet been identified. However, sequence-related genes with a high degree of similarity were isolated. This includes human and mouse Sp1 (Wimmer et al. 1993;Schöck et al. 1999a) and the btdlike gene bts1 of zebrafish (Tallafuss et al. 2001). Furthermore, BTD and SP1 proteins are capable of binding to the same DNA sites in vitro, share most biochemical properties, and regulate transcription via the same interacting factors (Wimmer et al. 1993;Schöck et al. 1999a). However, transgenes expressing Sp1 or bts1 in place of btd failed to rescue btd mutant embryos. This finding implies that despite the molecular similarities, none of the known vertebrate btd-like genes represents a btd ortholog (Schöck et al. 1999b;Tallafuss et al. 2001).Here we report the identification and the functional analysis of a murine btd homolog, termed mouse Btd (mBtd), showing that its activity rescues head segment formation in btd mutant fly embryos. Loss of mBtd in the mouse embryo causes severe brain defects and truncations of body structures, including the posterior axial skeleton and limbs.We focused our attention on the requirement of mBtd activity on limb development, a process that is initiated through interactions between ectoderm and mesenchyme. The result of these interactions is the formation of the so-called apical ectodermal ridge (AER), a signaling center which is generated through the concerted signaling activities of fibrob...