Nai;ve myogenic cells migrate from the somites into the developing vertebrate limb, where they simultaneously differentiate into myotubes and form distinct anatomical muscles. Limb signals have been hypothesized to direct the pattern of muscles formed, but the molecular nature of these signals and the identity of the cells that produce them have remained unclear. We have identified a population of lateral plate-derived limb mesodermal cells in both chick and mouse that expresses the transcription factor Tcf4 in a muscle-specific pattern independently of the muscle cells themselves. Functional experiments in the chick demonstrate that TCF4 and the Wnt-beta-catenin pathway in these limb mesodermal cells are critical for muscle patterning. We propose that Tcf4-expressing cells establish a prepattern in the limb mesoderm that determines the sites of myogenic differentiation and thus establishes the basic pattern of limb muscles.