Sonic hedgehog (Shh) promotes proliferation of neural stem cells (NSCs) in adult brain. However, Shh signaling does not act on NSCs until late gestational stages, suggesting that embryonic NSCs (= radial glia cell) and postnatal NSCs are differentially regulated for their proliferation. Furthermore, postnatal neurogenic niche contains various cell types such as ependymal cells that are also derived from embryonic NSCs around birth. Yet, how the distinct niche cell types are specified remains unclear. We focused on the Gli family of transcription factors (Gli1, Gli2, Gli3), which are activated or modified in response to Shh activity to better understand the molecular regulatory mechanism of Shh signaling. In particular, Gli3 is processed into a repressor form (Gli3R) in the absence of Shh signal and acts as the major negative transducer of the pathway. We have investigated the role of Gli3 as a repressor in two systems in which Shh activity is lacking: the developing dorsal forebrain and the embryonic NSCs. Our findings demonstrate the novel role of Gli3R in regulation of neural stem/progenitors in developing brain and in postnatal neurogenic niche. The role of Gli3 in establishment of postnatal neurogenic niche: Neural stem cells (NSCs) in the subventricular zone (SVZ) rely on environmental signals provided by the neurogenic niche for their proper function. However, little is known about the initial steps of niche establishment, as embryonic radial glia transition to postnatal NSCs. Here, we identify Gli3 repressor (Gli3R), a component of the Sonic hedgehog (Shh) pathway, as a critical factor controlling both cell type specification and structural organization of the developing SVZ. We demonstrate that Gli3R expressed in radial glia temporally regulates gp130/STAT3 signaling at the transcriptional level to suppress glial characteristics in differentiating ependymal cells. In addition, Gli3R maintains the proper level of Numb in ependymal cells to allow localization of cell adhesion molecules such as VCAM and E-cadherin. Thus, our findings reveal a novel role for Gli3R as a mediator of niche establishment and provide insights into the conditions required for proper SVZ neurogenic niche formation.