During limb bud formation, axis polarities are established as evidenced by the spatially restricted expression of key regulator genes. In particular, the mutually antagonistic interaction between the GLI3 repressor and HAND2 results in distinct and non-overlapping anterior-distal Gli3 and posterior Hand2 expression domains. This is a hallmark of the establishment of antero-posterior limb axis polarity, together with spatially restricted expression of homeodomain and other transcriptional regulators. Here, we show that TBX3 is required for establishment of the posterior expression boundary of anterior genes in mouse limb buds. ChIP-seq and differential gene expression analysis of wild-type and mutant limb buds identifies TBX3-specific and shared TBX3-HAND2 target genes. High sensitivity fluorescent whole-mount in situ hybridisation shows that the posterior expression boundaries of anterior genes are positioned by TBX3-mediated repression, which excludes anterior genes such as Gli3, Alx4, Hand1 and Irx3/5 from the posterior limb bud mesenchyme. This exclusion delineates the posterior mesenchymal territory competent to establish the Shh-expressing limb bud organiser. In turn, HAND2 is required for Shh activation and cooperates with TBX3 to upregulate shared posterior identity target genes in early limb buds.