The apical ectodermal ridge (AER) is a specialized ectodermal region essential for limb outgrowth. Msx2 expression patterns in limb development strongly suggest an important role for Msx2 in the AER. Our previous studies identified a 348-bp fragment of the chicken Msx2 gene with AER enhancer activity. In this study, the functions of four potential homeodomain binding TAAT sites in this enhancer were studied using transgenic mice and in vitro protein-DNA interactions. Transgenic studies indicate that the four TAAT sites are not redundant and that only the B-TAAT site is critical for AER enhancer activity. The expression patterns of Msx2 and Dlx5 genes in the AER suggest that they might be involved in the regulation of Msx2. In support of this hypothesis, we found that Msx2 and Dlx5 can bind to the B-TAAT site as well as to a fragment containing the D- and E-TAAT sites in the Msx2 AER enhancer sequences. (c)2002 Elsevier Science (USA).