Tendons and ligaments mediate the attachment of muscle to bone and of bone to bone to provide connectivity and structural integrity in the musculoskeletal system. We show that TGFβ signaling plays a major role in the formation of these tissues. TGFβ signaling is a potent inducer of the tendon progenitor (TNP) marker scleraxis both in organ culture and in cultured cells, and disruption of TGFβ signaling in Tgfb2^-/-;Tgfb3^-/- double mutant embryos or through inactivation of the type II TGFβ receptor (TGFBR2;also known as TβRII) results in the loss of most tendons and ligaments in the limbs, trunk, tail and head. The induction of scleraxis-expressing TNPs is not affected in mutant embryos and the tendon phenotype is first manifested at E12.5, a developmental stage in which TNPs are positioned between the differentiating muscles and cartilage, and in which Tgfb2 or Tgfb3 is expressed both in TNPs and in the differentiating muscles and cartilage. TGFβ signaling is thus essential for maintenance of TNPs,and we propose that it also mediates the recruitment of new tendon cells by differentiating muscles and cartilage to establish the connections between tendon primordia and their respective musculoskeletal counterparts, leading to the formation of an interconnected and functionally integrated musculoskeletal system.