In the vertebrate neural tube, regional Sonic hedgehog (Shh) signaling invokes a time- and concentration-dependent induction of six different cell populations mediated through Gli transcriptional regulators. Elsewhere in the embryo, Shh/Gli responses invoke different tissue-appropriate regulatory programs. A genome-scale analysis of DNA binding by Gli1 and Sox2, a pan-neural determinant, identified a set of shared regulatory regions associated with key factors central to cell fate determination and neural tube patterning. Functional analysis in transgenic mice validates core enhancers for each of these factors and demonstrates the dual requirement for Gli1 and Sox2 inputs for neural enhancer activity. Furthermore, through an unbiased determination of Gli-binding site preferences and analysis of binding site variants in the developing mammalian CNS, we demonstrate that differential Gli-binding affinity underlies threshold-level activator responses to Shh input. In summary, our results highlight Sox2 input as a context-specific determinant of the neural-specific Shh response and differential Gli-binding site affinity as an important cis-regulatory property critical for interpreting Shh morphogen action in the mammalian neural tube.