Limbs exhibit adaptive differentiation along their dorsoventral (DV) axis, determined by the dorsal expression of the LIM homeobox gene Lmx1b. The paired appendages (i.e. the pectoral and pelvic fins from which limbs evolved) arose in an early jawless ancestor via co-option of a midline-fin genetic program including modules for anteroposterior (AP) and proximodistal (PD) patterning. Unlike the AP and PD axes, median fins lack an unambiguous DV axis, leaving the origin of this DV pattern in paired appendages unresolved. Here, we describe Lmx1b expression in the posterior midline fins of cichlids, sturgeons and catsharks, revealing an ancestral role for this gene predating the origin of paired appendages. In median fins, Lmx1b activation depends on shh from the ZPA, whereas in paired fins it relies on ectodermal wnt signalling, indicating the evolution of novel regulatory inputs for dorsal patterning. We observe ephA4b, a putative Lmx1b target, is co-expressed with Lmx1b in dorsal pectoral and posterior midline fins and downregulated alongside Lmx1b, suggesting a role in both fin types related to axon guidance. We propose that novel regulation drove the repurposing of Lmx1b from posterior to dorsal fin determinant, with co-option of conserved downstream targets. Altogether, our findings demonstrate that the DV axis of paired appendages represents an evolutionary innovation arising from the integration of ancestral midline fin and flank determinants with novel regulatory inputs.