Foregut malformations (oesophageal atresia, tracheo-oesophageal fistula, lung anomalies and congenital stenosis of the oesophagus and trachea) are relatively common anomalies occurring in 1 in 2,000-5,000 live births, although their aetiology is poorly understood. The secreted glycoprotein Sonic hedgehog (Shh) has been suggested to act as an endodermal signal that controls hindgut patterning and lung growth. In mice, three zinc-finger transcription factors, Gli1, Gli2 and Gli3, have been implicated in the transduction of Shh signal. We report here that mutant mice lacking Gli2 function exhibit foregut defects, including stenosis of the oesophagus and trachea, as well as hypoplasia and lobulation defects of the lung. A reduction of 50% in the gene dosage of Gli3 in a Gli2-/- background resulted in oesophageal atresia with tracheo-oesophageal fistula and a severe lung phenotype. Mutant mice lacking both Gli2 and Gli3 function did not form oesophagus, trachea and lung. These results indicate that Gli2 and Gli3 possess specific and overlapping functions in Shh signalling during foregut development, and suggest that mutations in GLI genes may be involved in human foregut malformations.