Zic and Gli family proteins are transcription factors that share similar zinc finger domains. Recent studies indicate that Zic and Gli collaborate in neural and skeletal development. We provide evidence that the Zic and Gli proteins physically and functionally interact through their zinc finger domains. Moreover, Gli proteins were translocated to cell nuclei by coexpressed Zic proteins, and both proteins regulated each other's transcriptional activity. Our result suggests that the physical interaction between Zic and Gli is the molecular basis of their antagonistic or synergistic features in developmental contexts and that Zic proteins are potential modulators of the hedgehog-mediated signaling pathway.