Sonic hedgehog (Shh) acts as a morphogen to mediate the specification of distinct cell identities in the ventral neural tube through a Gli-mediated (Gli1-3) transcriptional network. Identifying Gli targets in a systematic fashion is central to the understanding of the action of Shh. We examined this issue in differentiating neural progenitors in mouse. An epitope-tagged Gli-activator protein was used to directly isolate cis-regulatory sequences by chromatin immunoprecipitation (ChIP). ChIP products were then used to screen custom genomic tiling arrays of putative Hedgehog (Hh) targets predicted from transcriptional profiling studies, surveying 50-150 kb of non-transcribed sequence for each candidate. In addition to identifying expected Gli-target sites, the data predicted a number of unreported direct targets of Shh action. Transgenic analysis of binding regions in Nkx2.2, Nkx2.1 (Titf1) and Rab34 established these as direct Hh targets. These data also facilitated the generation of an algorithm that improved in silico predictions of Hh target genes. Together, these approaches provide significant new insights into both tissue-specific and general transcriptional targets in a crucial Shh-mediated patterning process.