In the chick limb bud, the zone of polarizing activity controls limb patterning along the anteroposterior and proximodistal axes. Since retinoic acid can induce ectopic polarizing activity, we examined whether this molecule plays a role in the establishment of the endogenous zone of polarizing activity. Grafts of wing bud mesenchyme treated with physiologic doses of retinoic acid had weak polarizing activity but inclusion of a retinoic acid-exposed apical ectodermal ridge or of prospective wing bud ectoderm evoked strong polarizing activity. Likewise, polarizing activity of prospective wing mesenchyme was markedly enhanced by co-grafting either a retinoic acid-exposed apical ectodermal ridge or ectoderm from the wing region. This equivalence of ectoderm-mesenchyme interactions required for the establishment of polarizing activity in retinoic acid-treated wing buds and in prospective wing tissue, suggests a role of retinoic acid in the establishment of the zone of polarizing activity. We found that prospective wing bud tissue is a high-point of retinoic acid synthesis. Furthermore, retinoid receptor-specific antagonists blocked limb morphogenesis and down-regulated a polarizing signal, sonic hedgehog. Limb agenesis was reversed when antagonist-exposed wing buds were treated with retinoic acid. Our results demonstrate a role of retinoic acid in the establishment of the endogenous zone of polarizing activity.