Background: Adult mammalian muscle retains incredible plasticity. Muscle growth and repair involves the activation of undifferentiated myogenic precursors called satellite cells. In some circumstances, it has been proposed that existing myofibers may also cleave and produce a pool of proliferative cells that can re-differentiate into new fibers. Such myofiber dedifferentiation has been observed in the salamander blastema where it may occur in parallel with satellite cell activation. Moreover, ectopic expression of the homeodomain transcription factor Msx1 in differentiated C2C12 myotubes has been shown to induce their dedifferentiation. While it remains unclear whether dedifferentiation and redifferentiaton occurs endogenously in mammalian muscle, there is considerable interest in induced dedifferentiation as a possible regenerative tool. Methodology/Principal Findings: We previously showed that the homeobox protein Barx2 promotes myoblast differentiation. Here we report that ectopic expression of Barx2 in young immature myotubes derived from cell lines and primary mouse myoblasts, caused cleavage of the syncytium and downregulation of differentiation markers. Microinjection of Barx2 cDNA into immature myotubes derived from primary cells led to cleavage and formation of mononucleated cells that were able to proliferate. However, injection of Barx2 cDNA into mature myotubes did not cause cleavage. Barx2 expression in C2C12 myotubes increased the expression of cyclin D1, which may promote cell cycle re-entry. We also observed differential muscle gene regulation by Barx2 at early and late stages of muscle differentiation which may be due to differential recruitment of transcriptional activator or repressor complexes to muscle specific genes by Barx2. Conclusions/Significance: We show that Barx2 regulates plasticity of immature myofibers and might act as a molecular switch controlling cell differentiation and proliferation.