Adult urodeles (salamanders) are unique in their ability to regenerate complex organs perfectly. The recently developed Accessory Limb Model (ALM) in the axolotl provides an opportunity to identify and characterize the essential signaling events that control the early steps in limb regeneration. The ALM demonstrates that limb regeneration progresses in a stepwise fashion that is dependent on signals from the wound epidermis, nerves and dermal fibroblasts from opposite sides of the limb. When all the signals are present, a limb is formed de novo. The ALM thus provides an opportunity to identify and characterize the signaling pathways that control blastema morphogenesis and limb regeneration. In the present study, we have utilized the ALM to identity the buttonhead-like zinc-finger transcription factor, Sp9, as being involved in the formation of the regeneration epithelium. Sp9 expression is induced in basal keratinocytes of the apical blastema epithelium in a pattern that is comparable to its expression in developing limb buds, and it thus is an important marker for dedifferentiation of the epidermis. Induction of Sp9 expression is nerve-dependent, and we have identified KGF as an endogenous nerve factor that induces expression of Sp9 in the regeneration epithelium.