Dorsoventral patterning of the vertebrate nervous system is achieved by the combined activity of morphogenetic signals secreted from dorsal and ventral signalling centres. The Shh/Gli pathway plays a major role in patterning the ventral neural tube; however, the molecular mechanisms that limit target gene responses to specific progenitor domains remain unclear. Here, we show that Wnt1/Wnt3a, by signalling through the canonical beta-catenin/Tcf pathway, control expression of dorsal genes and suppression of the ventral programme, and that this role in DV patterning depends on Gli activity. Additionally, we show that Gli3 expression is controlled by Wnt activity. Identification and characterization of highly conserved non-coding DNA regions around the human Gli3 gene revealed the presence of transcriptionally active Tcf-binding sequences. These indicated that dorsal Gli3 expression might be directly regulated by canonical Wnt activity. In turn, Gli3, by acting as a transcriptional repressor, restricted graded Shh/Gli ventral activity to properly pattern the spinal cord.