Basic helix-loop-helix (bHLH) transcription factors control developmental decisions in a wide range of embryonic cell types. The HLH motif mediates homo- and heterodimerization, which juxtaposes the basic regions within the dimeric complex to form a bipartite DNA binding domain that recognizes a DNA consensus sequence known as an E-box. eHAND and dHAND (also known as HAND1 and HAND2) are closely related bHLH proteins that control cardiac, craniofacial and limb development. Within the developing limb, dHAND expression encompasses the zone of polarizing activity in the posterior region, where it has been shown to be necessary and sufficient to induce the expression of the morphogen sonic hedgehog. Misexpression of dHAND in the anterior compartment of the limb bud induces ectopic expression of sonic hedgehog, with resulting preaxial polydactyly and mirror image duplications of posterior digits. To investigate the potential transcriptional mechanisms involved in limb patterning by dHAND, we have performed a structure-function analysis of the protein in cultured cells and ectopically expressed dHAND mutant proteins in the developing limbs of transgenic mice. We show that an N-terminal transcriptional activation domain, and the bHLH region, are required for E-box-dependent transcription in vitro. Remarkably, however, digit duplication by dHAND requires neither the transcriptional activation domain nor the basic region, but only the HLH motif. eHAND has a similar limb patterning activity to dHAND in these misexpression experiments, indicating a conserved function of the HLH regions of these proteins. These findings suggest that dHAND may act via novel transcriptional mechanisms mediated by protein-protein interactions independent of direct DNA binding.