Previous studies have shown the distally retreating source of Scatter factor/Hepatocyte growth factor (SF/HGF) can account for the distal migration of myogenic precursor cells in the limb bud mesenchyme. However, the normal expression pattern of Sf/Hgf alone does not explain the distribution of muscle precursor cells. Hence, the position of the dorsal and ventral premuscle masses suggests the presence of additional patterning factors. We present evidence that BMP2 and 4 can act as such factors by inhibiting the expression of Tcf4, a downstream element of the canonical Wnt pathway. The normal position of muscle cells depends on the correct distribution of BMP and SF/HGF throughout the limb bud mesenchyme. Removal or inhibition of the BMP signals within the limb margins leads to a shift in position resulting in the fusion of the dorsal and ventral premuscle masses towards the manipulated areas. In the absence of BMPs, mispositioning requires the presence of SF/HGF. Consequently, ectopic application of exogenous SF/HGF in the presence of BMP signals does not change muscle positioning. We conclude that correct positioning of the premuscle masses in the limb buds is controlled by the combined influence of SF/HGF signals--guiding cells mainly in the proximo-distal axis--and BMP signals that restrict the positioning to the dorsal and ventral central portions of the limb buds.