Sonic hedgehog (Shh), which regulates proliferation in many contexts, functions as a limb morphogen to specify a distinct pattern of digits. How Shh's effects on cell number relate to its role in specifying digit identity is unclear. Deleting the mouse Shh gene at different times using a conditional Cre line, we find that Shh functions to control limb development in two phases: a very transient, early patterning phase regulating digit identity, and an extended growth-promoting phase during which the digit precursor mesenchyme expands and becomes recruited into condensing digit primordia. Our analysis reveals an unexpected alternating anterior-posterior sequence of normal mammalian digit formation. The progressive loss of digits upon successively earlier Shh removal mirrors this alternating sequence and highlights Shh's role in cell expansion to produce the normal digit complement.