X-linked Emery-Dreifuss muscular dystrophy (X-EDMD) is caused by mutations in the inner nuclear membrane protein emerin. Previous studies have shown that emerin binds to and inhibits the activity of LIM domain only 7 (Lmo7), a transcription factor that regulates the expression of genes implicated in X-EDMD. Here, we analyzed Lmo7 function in C2C12 myoblast differentiation and its regulation by emerin. We found that Lmo7 was required for proper myoblast differentiation. Lmo7-downregulated myoblasts exhibited reduced expression of Pax3, Pax7, Myf5 and MyoD, whereas overexpression of GFP-Lmo7 increased the expression of MyoD and Myf5. Upon myotube formation, Lmo7 shuttled from the nucleus to the cytoplasm, concomitant with reduced expression of MyoD, Pax3 and Myf5. Importantly, we show that Lmo7 bound the Pax3, MyoD and Myf5 promoters both in C2C12 myoblasts and in vitro. Because emerin inhibited Lmo7 activity, we tested whether emerin competed with the MyoD promoter for binding to Lmo7 or whether emerin sequestered promoter-bound Lmo7 to the nuclear periphery. Supporting the competition model, emerin binding to Lmo7 inhibited Lmo7 binding to and activation of the MyoD and Pax3 promoters. These findings support the hypothesis that the functional interaction between emerin and Lmo7 is crucial for temporally regulating the expression of key myogenic differentiation genes.