The vertebrate inner ear has two main components: the dorsal vestibular structures (responsible for balance) and the ventral cochlear duct(responsible for hearing). Sonic hedgehog (Shh) signalling, which emanates from the floor plate and notochord, directs the formation of these structures,but how it does this is unknown. Reciprocal gradients of Gli activator (GliA)and Gli repressor (GliR) activity are now shown by Doris Wu and co-workers to mediate these responses (p. 1713). The formation of the ventral-most otic region, the distal cochlear duct, depends on Gli2A/3A function, whereas that of the proximal cochlear duct and saccule depends on Gli3R antagonism (due to lower Shh signalling). What is particularly novel about Shh/Gli signalling in the inner ear is the dosage requirement for Gli3R in the dorsal ear; dorsal vestibular structures are rescued in Shh-/-;Gli3+/-embryos. These findings may have important implications for other developmental events in which Hedgehog signalling is crucial; for example,during dorsoventral cell specification in the spinal cord.