One of the greatest challenges to modern biology is to understand how complex, multi-cellular organisms such as humans develop from a single cell, the fertilized egg. This single egg, the zygote, has virtually unlimited potential to generate all the millions of different cell types that are found in an adult mammal. However, during development, the potential of cells becomes increasingly restricted as cell division and growth differentiate cells from one another in the adult organism. One important mechanism that appears to distinguish cells from one another during embryonic development involves secreted signalling molecules that provide spatial information which is critical for establishing their position and hence their specific function or fate in the mature organism. One such signalling molecule is known as Sonic Hedgehog. Sonic Hedgehog activates a cascade of responses in cells that receive this signal. A family of genes that have a central role in interpreting Sonic Hedgehog-supplied positional information are known as Gli genes. Studies in the fruitfly have provided important insights into the mechanisms by which Gli family proteins transduce the Sonic Hedgehog signal. In addition, mutations in Sonic Hedgehog and downstream genes, including Gli, have recently been implicated in cancers. This proposal seeks to utilize mouse genetics in order to explore the function of Gli genes in the development of the central nervous system. Some of the experiments proposed are designed to test whether aspects of the model for the role of Gli proteins in Sonic Hedgehog signalling developed in fruitflies are applicable to mammals. By addressing basic issues relating to the regulation of this pathway, a greater understanding of the development of the central nervous system will be gained. These insights will also provide valuable insights to our understanding of the mechanisms of cancers that involve Sonic Hedgehog and Gli gene abnormalities.