Fgf8 is required for normal development of the nasal region. Here, we have used a candidate approach to identify genes that are induced in chick nasal mesenchyme in response to FGF signaling. Using an explant culture system, we show that expression of the transcription factors Tbx2, Erm, Pea3, and Pax3, but not Pax7, in nasal mesenchyme is regulated by ectodermal signals in a stage-dependent manner. Using beads soaked in recombinant FGF protein and an FGF receptor antagonist, we furthermore demonstrate that FGF signaling is necessary and sufficient for expression of Tbx2, Erm, Pea3, and Pax3, but has no effect on Pax7 expression. We also show that, within the nasal mesenchyme, competence to respond to FGF signaling is initially widespread and uniform but becomes restricted to regions normally exposed to FGF at later stages of development, coincident with changes in FGF receptor expression. Finally, we provide evidence that FGF8 also regulates Erm and Pea3 expression in the nasal placodes. Together, these results identify Tbx2, Erm, Pea3, and Pax3 as downstream targets of FGF signaling in the facial area and suggest that these genes may mediate some of the effects of FGF8 during development of the nasal region.