The canonical Wnt and sonic hedgehog (Shh) pathways have been independently linked to cell proliferation in a variety of tissues and systems. However, interaction of these signals in the control of cell cycle progression has not been studied. Here, we demonstrate that in the developing vertebrate nervous system these pathways genetically interact to control progression of the G1 phase of the cell cycle. By in vivo loss-of-function experiments, we demonstrate the absolute requirement of an upstream Shh activity for the regulation of Tcf3/4 expression. In the absence of Tcf3/4, the canonical Wnt pathway cannot activate target gene expression, including that of cyclin D1, and the cell cycle is necessarily arrested at G1. In addition to the control of G1 progression, Shh activity controls the G2 phase through the regulation of cyclin E, cyclin A and cyclin B expression, and this is achieved independently of Wnt. Thus, in neural progenitors, cell cycle progression is co-ordinately regulated by Wnt and Shh activities.