Serotonin (5HT) plays major roles in the physiological regulation of many behavioral processes, including sleep, feeding, and mood, but the genetic mechanisms by which serotonergic neurons arise during development are poorly understood. In the present study, we have investigated the development of serotonergic neurons in the zebrafish. Neurons exhibiting 5HT-immunoreactivity (5HT-IR) are detected from 45 h postfertilization (hpf) in the ventral hindbrain raphe, the hypothalamus, pineal organ, and pretectal area. Tryptophan hydroxylases encode rate-limiting enzymes that function in the synthesis of 5HT. As part of this study, we cloned and analyzed a novel zebrafish tph gene named tphR. Unlike two other zebrafish tph genes (tphD1 and tphD2), tphR is expressed in serotonergic raphe neurons, similar to tph genes in mammalian species. tphR is also expressed in the pineal organ where it is likely to be involved in the pathway leading to synthesis of melatonin. To better understand the signaling pathways involved in the induction of the serotonergic phenotype, we analyzed tphR expression and 5HT-IR in embryos in which either Hh or Fgf signals are abrogated. Hindbrain 5HT neurons are severely reduced in mutants lacking activity of either Ace/Fgf8 or the transcription factor Noi/Pax2.1, which regulates expression of ace/fgf8, and probably other genes encoding signaling proteins. Similarly, serotonergic raphe neurons are absent in embryos lacking Hh activity confirming a conserved role for Hh signals in the induction of these cells. Conversely, over-activation of the Hh pathway increases the number of serotonergic neurons. As in mammals, our results are consistent with the transcription factors Nk2.2 and Gata3 acting downstream of Hh activity in the development of serotonergic raphe neurons. Our results show that the pathways involved in induction of hindbrain serotonergic neurons are likely to be conserved in all vertebrates and help establish the zebrafish as a model system to study this important neuronal class.