Holoprosencephaly (HPE) is a genetically and phenotypically heterogenous disorder involving the development of forebrain and midface, with an incidence of 1:16,000 live born and 1:250 induced abortions. This disorder is associated with several distinct facies and phenotypic variability: in the most extreme cases, anophthalmia or cyclopia is evident along with a congenital absence of the mature nose. The less severe form features facial dysmorphia characterized by ocular hypertelorism, defects of the upper lip and/or nose, and absence of the olfactory nerves or corpus callosum. Several intermediate phenotypes involving both the brain and face have been described. One of the gene loci, HPE3, maps to the terminal band of chromosome 7. We have performed extensive physical mapping studies and established a critical interval for HPE3, and subsequently identified the sonic hedgehog (SHH) gene as the prime candidate for the disorder. SHH lies within 15-250 kilobases (kb) of chromosomal rearrangements associated with HPE, suggesting that a 'position effect' has an important role in the aetiology of HPE. As detailed in the accompanying report, this role for SHH is confirmed by the detection of point mutations in hereditary HPE patients.