The polarization of nascent embryonic fields and the endowment of cells with organizer properties are key to initiation of vertebrate organogenesis. One such event is antero-posterior (AP) polarization of early limb buds and activation of morphogenetic Sonic Hedgehog (SHH) signaling in the posterior mesenchyme, which in turn promotes outgrowth and specifies the pentadactylous autopod. Inactivation of the Hand2 transcriptional regulator from the onset of mouse forelimb bud development disrupts establishment of posterior identity and Shh expression, which results in a skeletal phenotype identical to Shh deficient limb buds. In wild-type limb buds, Hand2 is part of the protein complexes containing Hoxd13, another essential regulator of Shh activation in limb buds. Chromatin immunoprecipitation shows that Hand2-containing chromatin complexes are bound to the far upstream cis-regulatory region (ZRS), which is specifically required for Shh expression in the limb bud. Cell-biochemical studies indicate that Hand2 and Hoxd13 can efficiently transactivate gene expression via the ZRS, while the Gli3 repressor isoform interferes with this positive transcriptional regulation. Indeed, analysis of mouse forelimb buds lacking both Hand2 and Gli3 reveals the complete absence of antero-posterior (AP) polarity along the entire proximo-distal axis and extreme digit polydactyly without AP identities. Our study uncovers essential components of the transcriptional machinery and key interactions that set-up limb bud asymmetry upstream of establishing the SHH signaling limb bud organizer.