Limb skeletal pattern relies heavily on graded Sonic hedgehog (Shh) signaling. As a morphogen and growth cue, Shh regulates identities of posterior limb elements, including the ulna/fibula and digits 2 through 5. In contrast, proximal and anterior structures, including the humerus/femur, radius/tibia, and digit 1, are regarded as Shh independent, and mechanisms governing their specification are unclear. Here, we show that patterning of the proximal and anterior limb skeleton involves two phases. Irx3 and Irx5 (Irx3/5) are essential in the initiating limb bud to specify progenitors of the femur, tibia, and digit 1. However, these skeletal elements can be restored in Irx3/5 null mice when Shh signaling is diminished, indicating that Shh negatively regulates their formation after initiation. Our data provide genetic evidence supporting the concept of early specification and progressive determination of anterior limb pattern.