Tetrapod limbs, forelimbs and hindlimbs, emerge as limb buds during development from appropriate positions along the rostro-caudal axis of the main body. In this study, tissue interactions by which rostro-caudal level-specific limb initiation is established were analyzed. The limb bud originates from the lateral plate located laterally to the paraxial mesoderm, and we obtained evidence that level-specific tissue interactions between the paraxial mesoderm and the lateral plate mesoderm are important for the determination of the limb-type-specific gene expression and limb outgrowth. When the wing-level paraxial mesoderm was transplanted into the presumptive leg region, the wing-level paraxial mesoderm upregulated the expression of Tbx5, a wing marker gene, and down regulated the expression of Tbx4 and Pitx1, leg marker genes, in the leg-level lateral plate. The wing-level paraxial mesoderm relocated into the leg level also inhibited outgrowth of the hindlimb bud and down regulated Fgf10 and Fgf8 expression, demonstrating that the wing-level paraxial mesoderm cannot substitute for the function of the leg-level paraxial mesoderm in initiation and outgrowth of the hindlimb. The paraxial mesoderm taken from the neck- and flank-level regions also had effects on Tbx5/Tbx4 expression with different efficiencies. These findings suggest that the paraxial mesoderm has level-specific abilities along the rostro-caudal axis in the limb-type-specific mechanism for limb initiation.