Dicer is an enzyme that processes microRNAs (miRNAs) to their mature forms. As miRNAs were first discovered for their role in the control of developmental timing, we investigated their potential requirement in mouse somitogenesis, an event with precise temporal periodicity. To address the collective role of miRNAs in mesoderm development including somite formation, we used T (Brachyury)-Cre mouse line to inactivate Dicer in most cells of the mesoderm lineage. This Dicer mutant exhibits a reduced anterior-posterior axis. Somite number remains normal in mutant embryos up until the death of the embryos more than two days after Dicer inactivation. Consistent with this, the molecular machineries required for establishing segmentation, including clock and wave front, are not perturbed. However, somite size is reduced and later-formed somites are caudalized, coincident with increased cell death. Outside of the paraxial mesoderm and prior to apparent reduction of the axis in the mutant, the position of the hindlimb bud, a lateral plate mesoderm-derived structure, is posteriorly shifted and the timing of hindlimb bud initiation is delayed accordingly. We observed changes in the expression of genes critical for limb positioning, which include a shifted and delayed downregulation of Hand2 and Tbx3, and shifted and delayed upregulation of Gli3 in the prospective limb bud field. The 3' UTRs of both Hand2 and Tbx3 harbor target sites for a seed sequence-sharing family of miRNAs mir-25/32/92/363/367. As an example of the family we show that mir-363, a miRNA with elevated expression in the prospective limb bud field, is capable of inhibiting Hand2/Tbx3 expression in vitro in a binding site-dependent manner. Together, our findings provide the first demonstration that in mouse embryonic mesoderm, while Dicer is dispensable for somite segmentation, it is essential for proper limb bud positioning.