The development of many organs depends on sequential epithelial-mesenchymal interactions, and the developing tooth germ provides a powerful model for elucidating the nature of these inductive tissue interactions. In Msx1-deficient mice, tooth development arrests at the bud stage when Msx1 is required for the expression of Bmp4 and Fgf3 in the dental mesenchyme (Bei, M. and Maas, R. (1998) Development 125, 4325-4333). To define the tissue requirements for Msx1 function, we performed tissue recombinations between wild-type and Msx1 mutant dental epithelium and mesenchyme. We show that through the E14.5 cap stage of tooth development, Msx1 is required in the dental mesenchyme for tooth formation. After the cap stage, however, tooth development becomes Msx1 independent, although our experiments identify a further late function of Msx1 in odontoblast and dental pulp survival. These results suggest that prior to the cap stage, the dental epithelium receives an Msx1-dependent signal from the dental mesenchyme that is necessary for tooth formation. To further test this hypothesis, Msx1 mutant tooth germs were first cultured with either BMP4 or with various FGFs for two days in vitro and then grown under the kidney capsule of syngeneic mice to permit completion of organogenesis and terminal differentiation. Previously, using an in vitro culture system, we showed that BMP4 stimulated the growth of Msx1 mutant dental epithelium (Chen, Y., Bei, M. Woo, I., Satokata, I. and Maas, R. (1996). Development 122, 3035-3044). Using the more powerful kidney capsule grafting procedure, we now show that when added to explanted Msx1-deficient tooth germs prior to grafting, BMP4 rescues Msx1 mutant tooth germs all the way to definitive stages of enamel and dentin formation. Collectively, these results establish a transient functional requirement for Msx1 in the dental mesenchyme that is almost fully supplied by BMP4 alone, and not by FGFs. In addition, they formally prove the postulated downstream relationship of BMP4 with respect to Msx1, establish the non-cell-autonomous nature of Msx1 during odontogenesis, and disclose an additional late survival function for Msx1 in odontoblasts and dental pulp.