Understanding the molecular mechanisms that regulate cellular proliferation and differentiation is a central theme of developmental biology. MicroRNAs (miRNAs) are a class of regulatory RNAs of approximately 22 nucleotides that post-transcriptionally regulate gene expression. Increasing evidence points to the potential role of miRNAs in various biological processes. Here we show that miRNA-1 (miR-1) and miRNA-133 (miR-133), which are clustered on the same chromosomal loci, are transcribed together in a tissue-specific manner during development. miR-1 and miR-133 have distinct roles in modulating skeletal muscle proliferation and differentiation in cultured myoblasts in vitro and in Xenopus laevis embryos in vivo. miR-1 promotes myogenesis by targeting histone deacetylase 4 (HDAC4), a transcriptional repressor of muscle gene expression. By contrast, miR-133 enhances myoblast proliferation by repressing serum response factor (SRF). Our results show that two mature miRNAs, derived from the same miRNA polycistron and transcribed together, can carry out distinct biological functions. Together, our studies suggest a molecular mechanism in which miRNAs participate in transcriptional circuits that control skeletal muscle gene expression and embryonic development.