The neuregulin-1 (NRG1) signaling pathway plays an important role in the development of the peripheral neuromuscular system, including in muscle spindle and postnatal myelination. We previously showed that NRG1 on the axonal membrane regulates peripheral nerve myelination through Grb2-associated binder 1 (Gab1), a scaffolding mediator of receptor tyrosine kinase signaling. Here, we determined the role of Gab1 in the development of muscles and the muscle spindle using muscle-specific conditional Gab1 knockout mice. The mutant mice showed general retardation in muscular growth and hypotrophy of extrafusal muscle fibers. In addition, the muscle-specific Gab1 knockout mutant exhibited significant underdevelopment of muscle spindles, which are normally regulated by NRG1, and abnormal proprioceptive behavior. Furthermore, the selective knockdown of Gab1 in C2C12 muscle cells reduced NRG1-induced expression of Egr3, a critical transcription factor for muscle spindle development. However, Gab2 knockout mice did not show any defects in the development of muscles or muscle spindles. Our findings suggest that Gab1 is an essential signaling molecule in mediating axonal NRG1 signaling for the development of both extrafusal and intrafusal muscle fibers.