The Sonic hedgehog (Shh) signaling pathway plays a key role in the development of the vertebrate central nervous system, including the eye. This pathway is mediated by the Gli transcription factors (Gli1, Gli2, and Gli3) that differentially activate and repress the expression of specific downstream target genes. In this study, we investigated the roles of the three vertebrate Glis in mediating midline Shh signaling in early ocular development. We examined the ocular phenotypes of Shh and Gli combination mutant mouse embryos and monitored proximodistal and dorsoventral patterning by the expression of specific eye development regulatory genes using in situ hybridization. We show that midline Shh signaling relieves the repressor activity of Gli3 adjacent to the midline and then promotes eye pattern formation through the nonredundant activities of all three Gli proteins. Gli3, in particular, is required to specify the dorsal optic stalk and to define the boundary between the optic stalk and the optic cup. Developmental Dynamics 235:594–605, 2006. © 2005 Wiley-Liss, Inc.