||Differentiation generates tissue structures and organs that possess both form and functionality. In higher organisms, the process is intricate and often involves the cooperation of many molecules, which are controlled both spatially and temporally. The worm mab-21 (mab is abbreviated from male abnormal) is an essential molecule for sensory ray differentiation. Mab-21 is a conserved gene and in this thesis, we have isolated its mouse orthologs, characterized their expression profiles, and examined their functions during early embryogenesis. The expression patterns of these mouse genes were diverse and the functional experiments indicated their importance in many tissue differentiation and organogenesis processes. In worms, mab-21 has been genetically defined to function in a BMP (Bone Morphogenetic Protein)-like pathway. BMPs are a subset of the TGF (Transforming Growth Factor)-beta pathway, which is a large family of signaling molecules with critical developmental roles in vertebrates and invertebrates. Further genetic analysis suggested that mab-21 is negatively regulated by the BMPs. The search commenced, for a BMP-guided modulator, which would directly impact on mab-21. An Msx class of homeodomain transcription factor was identified. In the second part of this thesis research, two additional themes were addressed in a cell culture system, (1) the expression and subcellular localization of MAB21, and (2) the modulation of MAB21 by Msx. The subcellular localization of the MAB21 protein in the nucleus and cytoplasm is conferred by different regions within the protein. In the presence of Msx, MAB21 translocates and relocalizes predominantly in the nucleus. Such a translocation phenomenon was gene specific. Deletion analysis of both MSX and MAB21 had also indicated the essentiality of the full length protein in inducing MAB21 translocation. As determined from our transcriptional and translational inhibition experiments, MAB21 was not directly transported into the nucleus by MSX, but rather its translocation was aided via a newly synthesized protein induced by MSX. The results from this study were useful in elucidating the regulatory relationship of Mab21 in the BMP pathway.