Largehead Atractylodes Rhizome (LAR) is the most commonly used Chinese herbal medicine for threatened miscarriage. Potential reproductive toxicity of LAR was identified in early pregnancy in animals. Skeletal anomalies including loss of ulna and distal digits, shortening of humerus and radius were observed in higher clinical dose groups. Here, we aimed to study the molecular mechanism of the congenital malformation induced by LAR. In vitro whole mouse embryo culture was used to confirm the embryotoxicity effects of LAR on developing limb buds during early organogenesis. A pregnant mouse model was employed to study the developmental gene expression by quantitative PCR and whole hybridization and apoptosis by terminal deoxynucleotidyl transferase dUTP nick end labeling staining, in the forelimbs and hindlimbs during development in vivo. Severe growth retardation, multiple embryonic malformations and delayed limb bud development were observed. Limb-specific Tbx gene expressions in both developing forelimbs and hindlimbs were significantly decreased. Increased developmental apoptosis in apical ectodermal ridge and mesenchymal mesoderm of the developing limb buds was identified. Overexpressions of Tbx2 and Tbx3 in embryos in vitro rescued LAR-induced abnormal limb development and reduced apoptosis in the developing forelimb buds. In conclusion, LAR affects limb development by suppressing the expression of limb developmental genes and disturbing programmed cell death during limb formation in mice.