Retinoic acid (RA) activity plays sequential roles during the development of the ventral spinal cord. Here, we have investigated the functions of local RA synthesis in the process of motoneuron specification and early differentiation using a conditional knockout strategy that ablates the function of the retinaldehyde dehydrogenase 2 (Raldh2) synthesizing enzyme essentially in brachial motoneurons, and later in mesenchymal cells at the base of the forelimb. Mutant (Raldh2L-/-) embryos display an early embryonic loss of a subset of Lim1+ brachial motoneurons, a mispositioning of Islet1+ neurons and inappropriate axonal projections of one of the nerves innervating extensor limb muscles, which lead to an adult forepaw neuromuscular defect. The molecular basis of the Raldh2L-/- phenotype relies in part on the deregulation of Hoxc8, which in turn regulates the RA receptor RARbeta. We further show that Hoxc8 mutant mice, which exhibit a similar congenital forepaw defect, display at embryonic stages molecular defects that phenocopy the Raldh2L-/- motoneuron abnormalities. Thus, interdependent RA signaling and Hox gene functions are required for the specification of brachial motoneurons in the mouse.