The expression of Sonic hedgehog (Shh) in mouse limb buds is regulated by a long-range enhancer 1 Mb upstream of the Shh promoter. We used 3D-FISH and chromosome conformation capture assays to track changes at the Shh locus and found that long-range promoter-enhancer interactions are specific to limb bud tissues competent to express Shh. However, the Shh locus loops out from its chromosome territory only in the posterior limb bud (zone of polarizing activity or ZPA), where Shh expression is active. Notably, while Shh mRNA is detected throughout the ZPA, enhancer-promoter interactions and looping out were only observed in small fractions of ZPA cells. In situ detection of nascent Shh transcripts and unstable EGFP reporters revealed that active Shh transcription is likewise only seen in a small fraction of ZPA cells. These results suggest that chromosome conformation dynamics at the Shh locus allow transient pulses of Shh transcription.