Anteroposterior (AP) patterning in the vertebrate hindbrain is dependent upon the establishment of segmental domains of Hox expression. We investigated the mechanism that governs the early expression of Hoxb4 and found that transient signaling from the paraxial mesoderm induces expression in the hindbrain. Induction involves a retinoid pathway requiring retinoic acid receptor (RAR) function within the neural plate. Characterization of a prerhombomeric enhancer from Hoxb4 reveals that a retinoic acid (RA) response element is an essential component of the early neural response to somite (s) signaling and can interpret positional information for setting the anterior boundary of expression. These data suggest a mechanism whereby, during normal hindbrain development, Hoxb4 expression is initiated by extrinsic signals and is subsequently maintained by Hox feedback circuits. This mechanism also accounts for the ectopic response of Hoxb4 in rhombomere (r) transpositions and after exposure to retinoids.