The generation of distinct neural subtypes depends on the activities of cell-extrinsic and -intrinsic factors during the development of the vertebrate CNS. Previous studies have provided a molecular basis for how neural progenitors are patterned and generate distinct descendants that are spatially and temporally regulated by inductive signals secreted by polarized sources. However, it still remains unknown how the generation of neural descendants by progenitors located at polarized sources of inductive signals is controlled. Sonic hedgehog (Shh), which is expressed at the ventral midline in the forebrain, has been shown to play a critical role for the patterning and specification of distinct neural subtypes in the forebrain. Here, we analyzed the identities and distributions of Shh-descendants generated at discrete time points in the forebrain by using a ShhcreERT2 mouse driver line in which a tamoxifen-inducible Cre cassette was inserted into the Shh locus together with a Z/EG mouse reporter line. Our results showed that Shh-expressing neural progenitors generated neuronal and glial descendants distributed throughout the telencephalon and diencephalon in a temporally distinct manner. Furthermore, our results showed that Shh-progenitors are located at two spatially distinct sub-domains that can be characterized by their temporally distinct patterns of Shh expression. These results suggest that temporally- and spatially controlled mechanisms that specify neural subtypes operate in the Shh-expressing progenitor domain, and raise the possibility that the distinct temporal gradient of Shh activity might be responsible for the generation of distinct neural subtypes in the telencephalon. (c) 2010 Wiley Periodicals, Inc. Develop Neurobiol, 2012