Expression of many skeletal muscle-specific genes depends on TEF-1 (transcription enhancer factor-1) and MEF2 transcription factors. In Drosophila, the TEF-1 homolog Scalloped interacts with the cofactor Vestigial to drive differentiation of the wing and indirect flight muscles. Here, we identify three mammalian vestigial-like genes, Vgl-1, Vgl-2, and Vgl-3, that share homology in a TEF-1 interaction domain. Vgl-1 and Vgl-3 transcripts are enriched in the placenta, whereas Vgl-2 is expressed in the differentiating somites and branchial arches during embryogenesis and is skeletal muscle-specific in the adult. During muscle differentiation, Vgl-2 mRNA levels increase and Vgl-2 protein translocates from the cytoplasm to the nucleus. In situ hybridization revealed co-expression of Vgl-2 with myogenin in the differentiating muscle of embryonic myotomes but not in newly formed somites prior to muscle differentiation. Like Vgl-1, Vgl-2 interacts with TEF-1. In addition, we show that Vgl-2 interacts with MEF2 in a mammalian two-hybrid assay and that Vgl-2 selectively binds to MEF2 in vitro. Co-expression of Vgl-2 with MEF2 markedly co-activates an MEF2-dependent promoter through its MEF2 element. Overexpression of Vgl-2 in MyoD-transfected 10T(1/2) cells markedly increased myosin heavy chain expression, a marker of terminal muscle differentiation. These results identify Vgl-2 as an important new component of the myogenic program.