The three vertebrate Gli proteins play a central role in mediating Hedgehog (Hh)-dependent cell fate specification in the developing spinal cord; however, their individual contributions to this process have not been fully characterized. In this paper, we have addressed this issue by examining patterning in the spinal cord of Gli2;Gli3 double mutant embryos, and in chick embryos transfected with dominant activator forms of Gli2 and Gli3. In double homozygotes, Gli1 is also not expressed; thus, all Gli protein activities are absent in these mice. We show that Gli3 contributes activator functions to ventral neuronal patterning, and plays a redundant role with Gli2 in the generation of V3 interneurons. We also show that motoneurons and three classes of ventral neurons are generated in the ventral spinal cord in double mutants, but develop as intermingled rather than discrete populations. Finally, we provide evidence that Gli2 and Gli3 activators control ventral neuronal patterning by regulating progenitor segregation. Thus, multiple ventral neuronal types can develop in the absence of Gli function, but require balanced Gli protein activities for their correct patterning and differentiation.