Loss of substantia nigra dopaminergic neurons, which develop from the ventral region of the midbrain, is associated with Parkinson's disease. During embryogenesis, induction of these and other ventral neurons is influenced by interactions with the underlying mesoderm of the notochord and the floor plate, which lies at the ventral midline of the developing CNS. Sonic hedgehog encodes a secreted peptide, which is expressed in notochord and floor plate cells and can induce appropriate ventral cell types in the basal forebrain and spinal cord. Here we demonstrate that Sonic hedgehog is sufficient to induce dopaminergic and other neuronal phenotypes in chick mesencephalic explants in vitro. We find that Sonic hedgehog is a general ventralizing signal in the CNS, the specific response being determined by the receiving cells. These results suggest that Sonic hedgehog may have utility in the induction of clinically important cell types.