MHM is a chicken Z chromosome-linked locus that is methylated and transcriptionally silent in male cells, but is hypomethylated and transcribed into a long non-coding RNA in female cells. MHM has been implicated in both localised dosage compensation and sex determination in the chicken embryo, but direct evidence is lacking. We investigated the potential role of MHM in chicken embryonic development, using expression analysis and retroviral-mediated mis-expression. At embryonic stages, MHM is only expressed in females. Northern blotting showed that both sense and antisense strands of the MHM locus are transcribed, with the sense strand being more abundant. Whole mount in situ hybridization confirmed that the sense RNA is present in developing female embryos, notably in gonads, limbs, heart, branchial arch and brain. Within these cells, the MHM RNA is localized to the nucleus. The antisense transcript is lowly expressed and has a cytoplasmic localization in cells. Mis-expression of MHM sense and antisense sequences results in overgrowth of tissues in which transcripts are predominantly expressed. This includes altered asymmetric ovarian development in females. In males, MHM mis-expression impairs gonadal expression of the testis gene, DMRT1. Both MHM sense and antisense mis-expression cause brain abnormalities, while MHM sense causes an increase in male-biased embryo mortality. These results indicate that MHM has a role in chicken normal embryonic development, including gonadal sex differentiation.