Outgrowth and patterning of the vertebrate limb are controlled by reciproca
l interactions between the posterior mesenchyme (polarizing region) and a s
pecialized ectodermal structure, the apical ectodermal ridge (AER)(1). Soni
c hedgehog (SHH) signalling by the polarizing region modulates fibroblast g
rowth factor (FGF)4 signalling by the posterior AER, which in turn maintain
s the polarizing region (SHH/FGF4 feedback loop)(2,3). Here we report that
the secreted bone-morphogenetic-protein (BMP) antagonist Gremlin(4) relays
the SHH signal from the polarizing region to the AER. Mesenchymal Gremlin e
xpression is lost in limb buds of mouse embryos homozygous for the limb def
ormity (Id) mutation, which disrupts establishment of the SHH/FGF4 feedback
loop(5-7). Grafting Gremlin-expressing cells into Id mutant limb buds resc
ues Fgf4 expression and restores the SHH/FGF4 feedback loop. Analysis of Sh
h-null mutant embryos(8,9) reveals that SHH signalling is required for main
tenance of Gremlin and Formin (the gene disrupted by the ld mutations)(10,1
1). In contrast, Formin, Gremlin and Fgf4 activation are independent of SHH
signalling. This study uncovers the cascade by which the SHH signal is rel
ayed from the posterior mesenchyme to the AER and establishes that Formin-d
ependent activation of the BMP antagonist Gremlin is sufficient to induce F
gf4 and establish the SHH/FGF4 feedback loop.