We have determined that Strong's Luxoid (lstJ) [corrected] mice have a 16 bp deletion in the homeobox region of the Alx-4 gene. This deletion, which leads to a frame shift and a truncation of the Alx-4 protein, could cause the polydactyly phenotype observed in lstJ [corrected] mice. We have cloned the chick homologue of Alx-4 and investigated its expression during limb outgrowth. Chick Alx-4 displays an expression pattern complementary to that of shh, a mediator of polarizing activity in the limb bud. Local application of Sonic hedgehog (Shh) and Fibroblast Growth Factor (FGF), in addition to ectodermal apical ridge removal experiments suggest the existence of a negative feedback loop between Alx-4 and Shh during limb outgrowth. Analysis of polydactylous mutants indicate that the interaction between Alx-4 and Shh is independent of Gli3, a negative regulator of Shh in the limb. Our data suggest the existence of a negative feedback loop between Alx-4 and Shh during vertebrate limb outgrowth.