Avian forelimb digit homology remains one of the standard themes in comparative biology and EvoDevo research. In order to resolve the apparent contradictions between embryological and paleontological evidence a variety of hypotheses have been presented in recent years. The proposals range from excluding birds from the dinosaur clade, to assignments of homology by different criteria, or even assuming a hexadactyl tetrapod limb ground state. At present two approaches prevail: the frame shift hypothesis and the pyramid reduction hypothesis. While the former postulates a homeotic shift of digit identities, the latter argues for a gradual bilateral reduction of phalanges and digits. Here we present a new model that integrates elements from both hypotheses with the existing experimental and fossil evidence. We start from the main feature common to both earlier concepts, the initiating ontogenetic event: reduction and loss of the anterior-most digit. It is proposed that a concerted mechanism of molecular regulation and developmental mechanics is capable of shifting the boundaries of hoxD expression in embryonic forelimb buds as well as changing the digit phenotypes. Based on a distinction between positional (topological) and compositional (phenotypic) homology criteria, we argue that the identity of the avian digits is II, III, IV, despite a partially altered phenotype. Finally, we introduce an alternative digit reduction scheme that reconciles the current fossil evidence with the presented molecular-morphogenetic model. Our approach identifies specific experiments that allow to test whether gene expression can be shifted and digit phenotypes can be altered by induced digit loss or digit gain. © 2013 Wiley Periodicals, Inc.