The Gli family of zinc finger transcription factors are mediators of Shh signalling in vertebrates. In previous studies, we showed that Shh signalling, via an essential Gli-binding site in the Myf5 epaxial somite (ES) enhancer, is required for the specification of epaxial muscle progenitor cells. Shh signalling is also required for the normal mediolateral patterning of myogenic cells within the somite. In this study, we investigate the role and the transcriptional activities of Gli proteins during somite myogenesis in the mouse embryo. We report that Gli genes are differentially expressed in the mouse somite. Gli2 and Gli3 are essential for Gli1 expression in somites, establishing Gli2 and Gli3 as primary mediators and Gli1 as a secondary mediator of Shh signalling. Combining genetic studies with the use of a transgenic mouse line expressing a reporter gene under the control of the Myf5 epaxial somite enhancer, we show that Gli2 or Gli3 is required for Myf5 activation in the epaxial muscle progenitor cells. Furthermore, Gli3, but not Gli2 represses Myf5 transcription in a dose-dependent manner in the absence of Shh. Finally, we provide evidence that hypaxial and myotomal gene expression is mispatterned in Gli2-/-Gli3-/- and Gli3-/-Shh-/- somites. Together, our data demonstrate both positive and negative regulatory functions for Gli2 and Gli3 in the control of Myf5 activation in the epaxial muscle progenitor cells and in dorsoventral and mediolateral patterning of the somite.