Sonic hedgehog (Shh) expression during limb development is crucial for specifying the identity and number of digits. The spatial pattern of Shh expression is restricted to a region called the zone of polarizing activity (ZPA), and this expression is controlled from a long distance by the cis-regulator ZRS. Here, members of two groups of ETS transcription factors are shown to act directly at the ZRS mediating a differential effect on Shh, defining its spatial expression pattern. Occupancy at multiple GABPα/ETS1 sites regulates the position of the ZPA boundary, whereas ETV4/ETV5 binding restricts expression outside the ZPA. The ETS gene family is therefore attributed with specifying the boundaries of the classical ZPA. Two point mutations within the ZRS change the profile of ETS binding and activate Shh expression at an ectopic site in the limb bud. These molecular changes define a pathogenetic mechanism that leads to preaxial polydactyly (PPD).