The zone of polarizing activity (ZPA) is a region at the posterior margin of the limb bud that induces mirrorimage duplications when grafted to the anterior of a second limb. We have isolated a vertebrate gene, Sonic hedgehog, related to the Drosophila segment polarity gene hedgehog, which is expressed specifically in the ZPA and in other regions of the embryo, that is capable of polarizing limbs in grafting experiments. Retinoic acid, which can convert anterior limb bud tissue into tissue with polarizing activity, concomitantly induces Sonic hedgehog expression in the anterior limb bud. Implanting cells that express Sonic hedgehog into anterior limb buds is sufficient to cause ZPA-like limb duplications. Like the ZPA, Sonic hedgehog expression leads to the activation of Hox genes. Sonic hedgehog thus appears to function as the signal for anteroposterior patterning in the limb.