Runx2 (Cbfa1) is a runt domain transcription factor that is essential for bone development and tooth morphogenesis. Teeth form as ectodermal appendages and their development is regulated by interactions between the epithelium and mesenchyme. We have shown previously that Runx2 is expressed in the dental mesenchyme and regulated by FGF signals from the epithelium, and that tooth development arrests at late bud stage in Runx2 knockout mice [Development 126 (1999) 2911]. In the present study, we have continued to clarify the role of Runx2 in tooth development and searched for downstream targets of Runx2 by extensive in situ hybridization analysis. The expression of Fgf3 was downregulated in the mesenchyme of Runx2 mutant teeth. FGF-soaked beads failed to induce Fgf3 expression in Runx2 mutant dental mesenchyme whereas in wild-type mesenchyme they induced Fgf3 in all explants indicating a requirement of Runx2 for transduction of FGF signals. Fgf3 was absent also in cultured Runx2-/- calvarial cells and it was induced by overexpression of Runx2. Furthermore, Runx2 was downregulated in Msx1 mutant tooth germs, indicating that it functions in the dental mesenchyme between Msx1 and Fgf3. Shh expression was absent from the epithelial enamel knot in lower molars of Runx2 mutant and reduced in upper molars. However, other enamel knot marker genes were expressed normally in mutant upper molars, while reduced or missing in lower molars. These differences between mutant upper and lower molars may be explained by the substitution of Runx2 function by Runx3, another member of the runt gene family that was upregulated in upper but not lower molars of Runx2 mutants. Shh expression in mutant enamel knots was not rescued by FGFs in vitro, indicating that in addition to Fgf3, Runx2 regulates other mesenchymal genes required for early tooth morphogenesis. Also, exogenous FGF and SHH did not rescue the morphogenesis of Runx2 mutant molars. We conclude that Runx2 mediates the functions of epithelial FGF signals regulating Fgf3 expression in the dental mesenchyme and that Fgf3 may be a direct target gene of Runx2.