Embryogenesis depends on self-regulatory interactions between spatially separated signaling centers, but few of these are well understood. Limb development is regulated by epithelial-mesenchymal (e-m) feedback loops between sonic hedgehog (SHH) and fibroblast growth factor (FGF) signaling involving the bone morphogenetic protein (BMP) antagonist Gremlin1 (GREM1). By combining mouse molecular genetics with mathematical modeling, we showed that BMP4 first initiates and SHH then propagates e-m feedback signaling through differential transcriptional regulation of Grem1 to control digit specification. This switch occurs by linking a fast BMP4/GREM1 module to the slower SHH/GREM1/FGF e-m feedback loop. This self-regulatory signaling network results in robust regulation of distal limb development that is able to compensate for variations by interconnectivity among the three signaling pathways.