The origin and evolution of the complex regulatory landscapes of some vertebrate developmental genes, often spanning hundreds of Kbp and including neighboring genes, remain poorly understood. The Sonic Hedgehog (Shh) genomic regulatory block (GRB) is one of the best functionally characterized examples, with several discrete enhancers reported within its introns, vast upstream gene-free region and neighboring genes (Lmbr1 and Rnf32). To investigate the origin and evolution of this GRB, we sequenced and characterized the Hedgehog (Hh) loci from three invertebrate chordate amphioxus species, which share several early expression domains with Shh. Using phylogenetic footprinting within and between chordate lineages, and reporter assays in zebrafish probing >30 Kbp of amphioxus Hh, we report large sequence and functional divergence between both groups. In addition, we show that the linkage of Shh to Lmbr1 and Rnf32, necessary for the unique gnatostomate-specific Shh limb expression, is a vertebrate novelty occurred between the two whole-genome duplications.