Transcriptional modulation may be mediated by cis-regulatory elements distant from their target genes. Mutations in a conserved locus about 1 Mb upstream of the Shh coding region often affect Shh expression and are associated with preaxial polydactyly (PPD) defects. To understand the molecular mechanism, we analyzed a novel mouse PPD model with a T-to-A point mutation in this distant locus. A core element of mutation (CEM) with putative enhancer activity was identified by promoter activity assay and shown to contain a matrix attachment region. HnRNP U preferentially bound to the mutant but not the wild-type CEM. Interestingly, HnRNP U also bound to the 5'-UTR of the Shh gene, which was not located in the nuclear matrix in wild-type embryonic cells, as indicated by chromatin immunoprecipitation. We propose that the 5'-UTR of Shh was pulled into the nuclear matrix by HnRNP U when the CEM was mutated, and consequently affected Shh expression. Therefore, distant cis-elements may modulate gene expression by altering HnRNP U's affinity for certain mediator proteins and nuclear relocation.