The floor plate plays important roles in ventral pattern formation and axonal guidance within the neural tube of vertebrate embryos. A critical event for floor plate development is the induction of a winged helix transcription factor, Hepatocyte Nuclear Factor-3beta (HNF-3beta). The enhancer for floor plate expression of HNF-3beta is located 3' of the transcription unit and consists of multiple elements. HNF-3beta induction depends on the notochord-derived signal, Sonic hedgehog (Shh). Genetic analysis in Drosophila has led to the identification of genes involved in the Hh signalling pathway, and cubitus interruptus (ci), encoding a protein with five zinc finger motifs, was placed downstream. In the present work, we test the involvement of Gli proteins, the mouse homologues of Ci, in activation of the floor plate enhancer of HNF-3beta. Transgenic analysis shows that a Gli-binding site is required for the activity of the minimal floor plate enhancer of HNF-3beta in vivo. Three Gli genes are differentially expressed in the developing neural tube. Gli expression is restricted to the ventral part, while Gli2 and Gli3 are expressed throughout the neural tube and dorsally, respectively. Strong Gli and Gli2, and weak Gli3 expressions transiently overlap with HNF-3beta at the time of its induction. Consistent with ventrally localized expression, Gli expression can be up-regulated by Shh in a cell line. Finally, the Gli-binding site acts as a Shh responsive element, and human GLI, but not GLI3, can activate this binding site in tissue culture. Taken together, these findings suggest that Gli, and probably also Gli2, are good candidates for transcriptional activators of the HNF-3beta floor plate enhancer, and the binding site for Gli proteins is a key element for response to Shh signalling. These results also support the idea that Gli/Ci are evolutionary conserved transcription factors in the Hedgehog signalling pathway.