Sonic hedgehog (Shh), a secreted morphogen and mitogen, is essential for nervous system development and neural stem cell (NSC) self-renewal. As the intracellular signal transduction of Shh in NSCs is largely unknown, we sought to characterize pathway targets using ligand stimulation and genetic models of activation. NSCs haploinsufficient for Patched (Ptc), a receptor repressive to Shh signaling, showed enhanced proliferation of a magnitude similar to Shh-treated wild-type (Wt) NSCs. Analysis of the Gli zinc-finger transcription factors, primary mediators of Shh activity, demonstrated differential induction between models of pathway activation. Gli1 was significantly induced in Wt NSCs exposed to Shh, whereas Gli2 was elevated and Gli1 expression did not change in Ptc(+/-) NSCs. Other Shh targets (Nmyc, Id factors) were induced under both conditions of pathway activation. Interestingly, Shh-treated Ptc(+/-) NSCs induced expression of Gli1 but failed to increase proliferation, suggesting that the NSCs may have reached a physiologic plateau in proliferative capacity. Thus, our data demonstrate that Ptc(+/-) mice have an expanded progenitor cell niche in vivo and that NSCs maintain a cell-intrinsic increase in basal proliferation in vitro that is sustained by a Gli transduction signature distinct from that of exogenous Shh stimulation. Additionally, Ptc(+/-) NSCs maintain tight control over mitosis and do not further augment proliferation in the presence of mitogenic stimulation.