The vertebrate limb is a classical model for understanding patterning of three-dimensional structures during embryonic development. While decades of research have elucidated the tissue and molecular interactions within the limb bud required for patterning and morphogenesis of the limb, the cellular and molecular events that shape the limb bud itself have remained largely unknown. We show that the mesenchymal cells of the early limb bud are not disorganized within the ectoderm as previously thought, but instead are highly organized and polarized. Using time lapse video microscopy we demonstrate that cells move and divide according to this orientation. The combination of oriented cell divisions and movements drives the proximal-to-distal elongation of the limb bud necessary to set the stage for subsequent patterning and morphogenesis. These cellular events are regulated by the combined activities of the Wnt and FGF pathways. We show that Wnt5a/JNK is necessary for the proper orientation of cell movements and cell division. In contrast FGF/Mapk signalling pathway, emanating from the AER, does not regulate cell orientation in the limb bud but instead establishes a gradient of cell velocity enabling continuous rearrangement of the cells at the distal tip of limb.