How divergent genetic systems regulate a common pathway during the development of two serial structures, forelimbs and hindlimbs, is not well understood. Specifically, HAND2 has been shown to regulate Shh directly to initiate its expression in the posterior margin of the limb mesenchyme. Although the Hand2-Shh morphoregulatory system operates in both the forelimb and hindlimb bud, a recent analysis suggested that its upstream regulation is different in the forelimb and hindlimb bud. A combination of all four Hox9 genes is required for Hand2 expression in the forelimb-forming region; however, it remains elusive what genetic system regulates the Hand2-Shh pathway in the hindlimb-forming region. By conditional inactivation of Islet1 in the hindlimb-forming region using the Hoxb6Cre transgene, we show that Islet1 is required for establishing the posterior hindlimb field, but not the forelimb field, upstream of the Hand2-Shh pathway. Inactivation of Islet1 caused the loss of posterior structures in the distal and proximal regions, specifically in the hindlimb. We found that Hand2 expression was downregulated in the hindlimb field and that Shh expression was severely impaired in the hindlimb bud. In the Hoxb6Cre; Islet1 mutant pelvis, the proximal element that is formed in a Shh-independent manner, displayed complementary defects in comparison with Pitx1–/– hindlimbs. This suggests that Islet1 and Pitx1 function in parallel during girdle development in hindlimbs, which is in contrast with the known requirement for Tbx5 in girdle development in forelimbs. Our studies have identified a role for Islet1 in hindlimb-specific development and have revealed Islet1 functions in two distinct processes: regulation upstream of the Hand2-Shh pathway and contributions to girdle development.