Vertebrate limb development depends on signals from the apical ectodermal ridge (AER), which rims the distal tip of the limb bud 1. Removal of the AER in chick results in limbs lacking distal skeletal elements 2, 3. Fibroblast growth factor (FGF) proteins can substitute for the AER (refs 4–7), suggesting that FGF signalling mediates AER activity. Of the four mouse Fgf genes (Fgf4, Fgf8, Fgf9, Fgf17) known to display AER-specific expression domains within the limb bud (AER-Fgfs), only Fgf8 is expressed throughout the AER. Moreover, Fgf8 expression precedes that of other AER-Fgfs (refs 8–13), suggesting that Fgf8 may perform unique functions early in limb development 6, 7. In mice, loss of function of Fgf4 (refs 13, 14), Fgf9 (D. Ornitz, pers. comm.) or Fgf17 (ref. 15) has no effect on limb formation. We report here that inactivating Fgf8 in early limb ectoderm causes a substantial reduction in limb-bud size, a delay in Shh expression, misregulation of Fgf4 expression, and hypoplasia or aplasia of specific skeletal elements. Our data identify Fgf8 as the only known AER-Fgf individually necessary for normal limb development, and provide insight into the function of Fgf signalling from the AER in the normal outgrowth and patterning of the limb.