Mice homozygous for the recessive limb deformity (ld) mutation display both limb and renal defects. The limb defects, oligodactyly and syndactyly, have been traced to improper differentiation of the apical ectodermal ridge (AER) and shortening of the anteroposterior limb axis. The renal defects, usually aplasia, are thought to result from failure of ureteric bud outgrowth. Since the ld locus gives rise to multiple RNA isoforms encoding several different proteins (termed formins), we wished to understand their role in the formation of these organs. Therefore, we first examined the embryonic expression patterns of the four major ld mRNA isoforms. Isoforms I, II and III (all containing a basic amino terminus) are expressed in dorsal root ganglia, cranial ganglia and the developing kidney including the ureteric bud. Isoform IV (containing an acidic amino terminus) is expressed in the notochord, the somites, the apical ectodermal ridge (AER) of the limb bud and the developing kidney including the ureteric bud. Using a lacZ reporter assay in transgenic mice, we show that this differential expression of isoform IV results from distinct regulatory sequences upstream of its first exon. These expression patterns suggest that all four isoforms may be involved in ureteric bud outgrowth, while isoform IV may be involved in AER differentiation. To define further the developmental consequences of the ld limb defect, we analyzed the expression of a number of genes thought to play a role in limb development. Most significantly, we find that although the AERs of ld limb buds express several AER markers, they do not express detectable levels of fibroblast growth factor 4 (fgf-4), which has been proposed to be the AER signal to the mesoderm. Thus we conclude that one or more formins are necessary to initiate and/or maintain fgf-4 production in the distal limb. Since ld limbs form distal structures such as digits, we further conclude that while fgf-4 is capable of supporting distal limb outgrowth in manipulated limbs, it is not essential for distal outgrowth in normal limb development. In addition, ld limbs show a severe decrease in the expression of several mesodermal markers, including sonic hedgehog (shh), a marker for the polarizing region and Hoxd-12, a marker for posterior mesoderm. We propose that incomplete differentiation of the AER in ld limb buds leads to reduction of polarizing activity and defects along the anteroposterior axis