Sonic hedgehog (Shh) has been implicated in the ongoing neurogenesis in postnatal rodent brains. Here we adopted an in vivo genetic fate-mapping strategy, using Gli1 (GLI-Kruppel family member) as a sensitive readout of Shh activity, to systematically mark and follow the fate of Shh-responding cells in the adult mouse forebrain. We show that initially, only a small population of cells (including both quiescent neural stem cells and transit-amplifying cells) responds to Shh in regions undergoing neurogenesis. This population subsequently expands markedly to continuously provide new neurons in the forebrain. Our study of the behaviour of quiescent neural stem cells provides in vivo evidence that they can self-renew for over a year and generate multiple cell types. Furthermore, we show that the neural stem cell niches in the subventricular zone and dentate gyrus are established sequentially and not until late embryonic stages.