A lingering question in developmental biology has centered on how transcription factors with widespread distribution in vertebrate embryos can perform tissue-specific functions. Here, using the murine hindlimb as a model, we investigate the elusive mechanisms whereby PBX TALE homeoproteins, viewed primarily as HOX cofactors, attain context-specific developmental roles despite ubiquitous presence in the embryo. We first demonstrate that mesenchymal-specific loss of PBX1/2 or the transcriptional regulator HAND2 generates similar limb phenotypes. By combining tissue-specific and temporally controlled mutagenesis with multi-omics approaches, we reconstruct a gene regulatory network (GRN) at organismal-level resolution that is collaboratively directed by PBX1/2 and HAND2 interactions in subsets of posterior hindlimb mesenchymal cells. Genome-wide profiling of PBX1 binding across multiple embryonic tissues further reveals that HAND2 interacts with subsets of PBX-bound regions to regulate limb-specific GRNs. Our research elucidates fundamental principles by which promiscuous transcription factors cooperate with cofactors that display domain-restricted localization to instruct tissue-specific developmental programs.