Hedgehog (Hh) signaling plays a significant role in defining the polarity of a variety of tissue types along the anterior/posterior and dorsal/ventral axes in both vertebrate and invertebrate organisms. The pathway through which Hh transduces its signal is still obscure, however, recent data have implicated the cyclic AMP-dependent protein kinase A as a negative regulator of the Hh signal transduction pathway. One of the vertebrate Hh family members, Sonic hedgehog (Shh), can induce ventral neural cell types both in vivo and in vitro; high concentrations induce floor plate and lower concentrations motor neurons. To investigate whether PKA plays an active role in the suppression of ventral neural differentiation, we generated transgenic embryos expressing a dominant negative form of PKA (dnPKA) in primarily dorsal aspects of the mouse CNS. Similar to our earlier results with Shh, we observed the induction of floor plate and motor neuron markers in embryos expressing the dominant negative PKA transgene and the loss of dorsal gene expression at rostral levels. Thus suppression of PKA activity is sufficient to activate targets of the Shh signaling pathway in the vertebrate CNS suggesting that induction of ventral cell types occurs via the antagonistic action of Shh on PKA activity. Two mammalian target genes that are strongly expressed in ectopic dorsal locations in response to dnPKA are Ptc and Gli. As both of these are targets of Drosophila Hh signaling, our data point to an evolutionary conservation in both the mechanisms of signaling and the effectors of the signaling pathway.