Upon limb amputation in salamanders, anterior and posterior connective tissue cells form distinct signalling centres that together fuel successful regeneration. The molecular properties that distinguish anterior and posterior cells prior to injury, which enable them to initiate different signalling centres after amputation, are not known. These anterior and posterior identities, crucial for regeneration, were thought to be established during development and to persist through successive regeneration cycles as positional memory. However, the molecular nature of these memory states and whether these identities can be engineered have remained outstanding questions. Here, we identify a positive feedback mechanism encoding posterior identity in the axolotl limb, which can be used to newly encode positional memory in regenerative cells. Posterior cells express residual levels of the bHLH transcription factor Hand2 from development and this is a priming molecule necessary and sufficient to establish a Shh signalling centre after limb amputation. During regeneration, Shh feeds back and reinforces Hand2 expression in nearby cells. Hand2 is sustained following regeneration, safeguarding posterior memory, while Shh is shut off. As a consequence of this Hand2-Shh system, anterior and posterior identities are differentially susceptible to alteration. Posterior cells are stabilised against anteriorisation as their expression of Hand2 poises them to trigger the Hand2-Shh loop. In contrast, anterior cells can be reprogrammed: a transient exposure to Shh during regeneration causes anterior cells to gain Hand2 expression and a lasting competence to express Shh. In this way, regeneration is an opportunity and entry point to re-write positional memory. Our results implicate positive feedback in the stability of positional memory and explain why positional memory is more easily altered in one direction (anterior to posterior) than the other. Because modifying positional memory changes signalling outputs from regenerative cells, our findings have wider implications for tissue engineering.