Gli transcription factors are downstream targets of the Hedgehog signaling pathway. Two of the three Gli proteins harbor gene transcription repressor function in the N-terminal half. We have analyzed the sequences and identified a potential repressor domain in Gli2 and Gli3 and have tested this experimentally. Overexpression studies confirm that the N-terminal parts harbor gene repression activity and we mapped the minimal repressor to residues 106 till 236 in Gli3. Unlike other mechanisms that inhibit Gli induced gene transcription, the repressor domain identified here does not utilize Histone deacetylases (HDACs) to achieve repression, as confirmed by HDAC inhibition studies and pull-down assays. This distinguishes the identified domain from other regulatory parts with negative influence on transcription.