Hedgehog signaling is required for multiple aspects of brain development, including growth, the establishment of both dorsal and ventral midline patterning and the generation of specific cell types such as oligodendrocytes and interneurons. To identify more precisely when during development hedgehog signaling mediates these events, we directed the removal of hedgehog signaling within the brain by embryonic day 9 of development, using a FoxG1(Cre) driver line to mediate the removal of a conditional smoothened null allele. We observed a loss of ventral telencephalic patterning that appears to result from an initial lack of specification of these structures rather than by changes in proliferation or cell death. A further consequence of the removal of smoothened in these mice is the near absence of both oligodendrocytes and interneurons. Surprisingly, the dorsal midline appears to be patterned normally in these mutants. Together with previous analyses, the present results demonstrate that hedgehog signaling in the period between E9.0 and E12 is essential for the patterning of ventral regions and the generation of cell types that are thought to largely arise from them.