We investigated the role of hedgehog (Hh) signalling on zebrafish neurulation, focusing on the intimate relationship between neurogenesis and morphogenesis during the neural keel stage. Through the analyses of Hh loss- and gain-of-function phenotypes, we found that Hh signalling controls the neural keel morphogenesis. To investigate underlying mechanisms, we examined cellular elongation polarity in the neural keel of Hh loss- and gain-of-function phenotypes and compared this with the deficient phenotype of a planar cell polarity (PCP) molecule, Trilobite/Strabismus. We found that Hh signalling controls cell elongation polarity of the neuroepithelium at least in part by means of PCP pathway; however, its effects are not strong enough per se to affect keel morphogenesis; instead Hh signalling mainly controls keel morphogenesis by means of affecting both medial and lateral neurogenesis. We devised a method for precise evaluation of neurogenesis in loss- and gain-of-Hh phenotypes that compensates for its delay caused by disturbed morphogenesis. We present a model that Hh signalling exerts level-dependent and binary-opposite effects on medial neurogenesis, whose modification to explain lateral neurogenesis reveals regional differences of underlying mechanisms between the two proneural domains. Such differences seem to be created in part by regional effector signalling; the effects of high Hh-signalling on medial neurogenesis can be reversed in accordance to medial Tri/Stbm level, in a polarity independent manner. Developmental Dynamics 235:978–997, 2006. © 2006 Wiley-Liss, Inc.