Cardiac neural crest cells are known to play multiple roles during development of the inflow and outflow tract of the heart and the aortic arch. In addition, cardiac neural crest is required for normal heart tube looping and regulation of myocardial cell proliferation, as well as differentiation and function of the myocardium. We show that the homeobox gene Lbx1 is expressed in a subpopulation of the cardiac neural crest during tubular heart formation. Inactivation of the Lbx1 gene in mice resulted in defects in heart looping, changes in gene expression pattern, and increased cell proliferation ensuing in myocardial hyperplasia. We found that the activity of the Lbx1 promoter, as indicated by a LacZ reporter gene, is upregulated in the hearts of Lbx1(+/-):splotch(1H)/splotch(1H) and Lbx1(-/-) mice, indicating that Pax3 and Lbx1 participate in a negative regulatory feedback that might be necessary for normal differentiation and function of the myocardium during early heart development. Because migration of Lbx1-expressing neural crest cells was not altered in Lbx1(-/-) embryos, we postulate that Lbx1 gene function is critical for specification of a subpopulation of cardiac neural crest subsequent to migration.