During vertebrate limb development, the ectoderm directs the dorsoventral patterning of the underlying mesoderm. To define the molecular events involved in this process, we have analyzed the function of WNT7a, a secreted factor expressed in the dorsal ectoderm, and LMX1, a LIM homeodomain transcription factor expressed in the dorsal mesenchyme. Ectopic expression of Wnt7a is sufficient to induce and maintain Lmx1 expression in limb mesenchyme, both in vivo and in vitro. Ectopic expression of Lmx1 in the ventral mesenchyme is sufficient to generate double-dorsal limbs. Thus, the dorsalization of limb mesoderm appears to involve the WNT7a-mediated induction of Lmx1 in limb mesenchymal cells.