Formation of the adenohypophysis in mammalian embryos occurs via an invagination of the oral ectoderm to form Rathke's pouch, which becomes exposed to opposing dorsoventral gradients of signaling proteins governing specification of the different hormone-producing pituitary cell types. One signal promoting pituitary cell proliferation and differentiation to ventral cell types is Sonic hedgehog (Shh) from the oral ectoderm. To study pituitary formation and patterning in zebrafish, we cloned four cDNAs encoding different pituitary hormones, prolactin (prl), proopiomelancortin (pomc), thyroid stimulating hormone (tsh), and growth hormone (gh), and analyzed their expression patterns relative to that of the pituitary marker lim3. prl and pomc start to be expressed at the lateral edges of the lim3 expression domain, before pituitary cells move into the head. This indicates that patterning of the pituitary anlage and terminal differentiation of pituitary cells starts while cells are still organized in a placodal fashion at the anterior edge of the developing brain. Following the expression pattern of prl and pomc during development, we show that no pituitary-specific invagination equivalent to Rathke's pouch formation takes place. Rather, pituitary cells move inwards together with stomodeal cells during oral cavity formation, with medial cells of the placode ending up posterior and lateral cells ending up anterior, resulting in an anterior-posterior, rather than a dorsoventral, patterning of the adenohypophysis. Carrying out loss- and gain-of-function experiments, we show that Shh from the ventral diencephalon plays a crucial role during induction, patterning, and growth of the zebrafish adenohypophysis. The phenotypes are very similar to those obtained upon pituitary-specific inactivation or overexpression of Shh in mouse embryo, suggesting that the role of Shh during pituitary development has been largely conserved between fish and mice, despite the different modes of pituitary formation in the two vertebrate classes.