In vertebrates, two pairs of buds that give rise to the fore- and hindlimbs form at discrete positions along the rostral-caudal axis of the body. The mechanism responsible for the positioning of the limb buds is still largely unknown. Here we show a novel function for Cut homeobox transcription factor 2, Cux2, the ortholog of Drosophila cut, in refining the forelimb field during chick development. Cux2 is expressed in the forelimb field before the emergence of the limb buds. Knocking down the expression of Cux2 using small interfering RNA (siRNA) resulted in a caudal shift of the forelimb bud, whereas misexpression of Cux2 or the constitutively active Cux2-VP16 caused a rostral shift of the forelimb bud or reduction of the forelimb field along the anterior-posterior axis. Further functional analyses revealed that expression of Hoxb genes and retinaldehyde dehydrogenase 2 (Raldh2), which are involved in limb positioning, are directly activated by Cux2 in the lateral plate mesoderm. Our data suggest that Cux2 in the lateral plate mesoderm refines the forelimb field via regulation of Raldh2 and Hoxb genes in chicken embryos.