Structural variants (SVs) affecting non-coding cis-regulatory elements are a common cause of congenital limb malformation. Yet, the functional interpretation of these non-coding variants remains challenging. The human Liebenberg syndrome is characterised by a partial transformation of the arms into legs and has been shown to be caused by SVs at the PITX1 locus leading to its misregulation in the forelimb by its native enhancer element Pen. This study aims to elucidate the genetic cause of an unsolved family with a mild form of Liebenberg syndrome and investigate the role of promoters in long-range gene regulation. Here, we identify SVs by whole genome sequencing (WGS) and use CRISPR-Cas9 genome editing in transgenic mice to assign pathogenicity to the SVs. In this study, we used WGS in a family with three mildly affected individuals with Liebenberg syndrome and identified the smallest deletion described so far including the first non-coding exon of H2AFY. To functionally characterise the variant, we re-engineered the 8.5 kb deletion using CRISPR-Cas9 technology in the mouse and showed that the promoter of the housekeeping gene H2afy insulates the Pen enhancer from Pitx1 in forelimbs; its loss leads to misexpression of Pitx1 by the pan-limb activity of the Pen enhancer causing Liebenberg syndrome. Our data indicate that housekeeping promoters may titrate promiscuous enhancer activity to ensure normal morphogenesis. The deletion of the H2AFY promoter as a cause of Liebenberg syndrome highlights this new mutational mechanism and its role in congenital disease.