Myogenesis is a highly co-ordinated process driven by paracrine signalling in conjunction with an intricate biomechanical niche. Bone morphogenetic proteins (BMPs) and the antagonist Noggin balance proliferation and differentiation of muscle progenitors and adult muscle stem cells. However, there is a lack of systematic understanding of how BMP/Noggin signalling co-ordinates with the microenvironment during fetal myogenesis in mammals. Understanding the mechanisms that drive the myogenic program is essential to determine the molecular basis of muscle disease and regeneration. This study investigated the role of BMP/Noggin signalling during limb myogenesis. A comprehensive phenotypic analysis of a Noggin knockout mouse model (Nog KO) showed altered proliferation, differentiation and fusion of myogenic progenitor cells altogether decreasing myofiber formation. This was re-capitulated by a CRISPR/Cas9 generated Noggin-deficient C2C12 myoblast cell line. Furthermore, a striking disappearance of myofibers was observed in fetal stages which was accompanied by loss of the basal lamina and ectopic expression of the extracellular matrix component Tenascin-C (TnC). This altered the biomechanical niche by reducing the stiffness of the muscle tissue. Myotubes in these muscles were characterized by exacerbated BMP/SMAD signalling and displayed hallmarks of de-differentiation including cell cycle re)entry in otherwise post-mitotic myonuclei. Furthermore, in vivo genetic lineage tracing analysis in the Nog KO fetuses revealed trans-differentiation of the myogenic cells into chondrogenic, osteogenic and connective tissue cells. Analysis of mouse myotubes in vitro demonstrated that myonuclear cell cycle re-entry can be initiated by BMPs with superb potency, such as generated upon protease cleavage, in combination with TnC and substrate stiffness below the endogenous range for muscle. This study reveals a previously unseen capacity of muscle fragmentation and cell- fate switch in a mammalian organism. It was demonstrated that a combination of exacerbated BMP signalling and the biomechanical niche influences muscle-cell plasticity. This work highlights the importance of maintaining the intricate balance between BMP and Noggin during developmental myogenesis. This knowledge can be extrapolated to gain a novel perspective on muscle diseases like muscular atrophy and to develop new tools to foster muscle regeneration.