During the development of the nervous system and other organs in the embryo, a limited set of master signaling pathways are used repeatedly for induction, patterning and growth. Among these, the Sonic hedgehog (Shh) pathway is crucial for the development of many structures in the brain. How the context-specific interplay between these various signaling pathways produces distinct temporal and spatial outcomes is not clear. Resolving this problem is a major goal in the study of cell and organ development. Here, we focus on signaling events during dorso-ventral patterning of the embryonic forebrain in vertebrates. In particular, we discuss the role of the Shh pathway in this process and on its interactions with the FGF, retinoic acid and Nodal pathways and other information cascades that modify its effects.