We have employed the hybrid hammerhead ribozyme-based gene discovery system for identification of genes functionally involved in muscle differentiation using in vitro myoblast differentiation assay. The major muscle regulatory genes (MyoD1, Mylk, myosin, myogenin, and Myf5) were identified endorsing the validity of this method. Other gene targets included tumor suppressors and cell cycle regulators (p19(ARF) and p21(WAF1)), FGFR-4, fibronectin, Prkg2, Pdk4, fem, and six novel proteins. Functional involvement of three of the identified targets in myoblast differentiation was confirmed by their specific knockdown using ribozymes and siRNA. Besides demonstrating a simple and an effective method of isolation of gene functions involved in muscle differentiation, we report for the first time that overexpression of Fem, a member of the sex-determining family of proteins, caused accelerated myotube formation, and its targeting deferred myoblast differentiation. This functional gene screening is not only helpful in understanding the molecular pathways of muscle differentiation but also to design molecular strategies for myopathologic therapies.