Proximal-to-distal growth of the embryonic limbs requires Fgf10 in the mesenchyme to activate Fgf8 in the apical ectodermal ridge (AER), which in turn promotes mesenchymal outgrowth. We show here that the growth arrest specific gene 1 (Gas1) is required in the mesenchyme for the normal regulation of Fgf10/Fgf8. Gas1 mutant limbs have defects in the proliferation of the AER and the mesenchyme and develop with small autopods, missing phalanges and anterior digit syndactyly. At the molecular level, Fgf10 expression at the distal tip mesenchyme immediately underneath the AER is preferentially affected in the mutant limb, coinciding with the loss of Fgf8 expression in the AER. To test whether FGF10 deficiency is an underlying cause of the Gas1 mutant phenotype, we employed a limb culture system in conjunction with microinjection of recombinant proteins. In this system, FGF10 but not FGF8 protein injected into the mutant distal tip mesenchyme restores Fgf8 expression in the AER. Our data provide evidence that Gas1 acts to maintain high levels of FGF10 at the tip mesenchyme and support the proposal that Fgf10 expression in this region is crucial for maintaining Fgf8 expression in the AER.