Generation of distinct ventral neuronal subtypes in the developing spinal cord requires Shh signaling mediated by the Gli family of transcription factors. Genetic studies of Shh(-/-);Gli3(-/-) double mutants indicated that the inhibition of Gli3 repressor activity by Shh is sufficient for the generation of different neurons including motor neurons. In this study, we show that although ventral neural progenitors are initiated in normal numbers in Shh(-/-);Gli3(-/-) mutants, the subsequent appearance of motor neuron progenitors shows a approximately 20-hour lag, concomitant with a delay in the activation of a pan-neuronal differentiation program and cell cycle exit of ventral neural progenitors. Accordingly, the Shh(-/-);Gli3(-/-) mutant spinal cord exhibits a delay in motor neuron differentiation and an accumulation of a ventral neural progenitor pool. The requirement of Shh and Gli3 activities to promote the timely appearance of motor neuron progenitors is further supported by the analysis of Ptch1(-/-) mutants, in which constitutive Shh pathway activity is sufficient to elicit ectopic and premature differentiation of motor neurons at the expense of ventral neural progenitors. Taken together, our analysis suggests that, beyond its well established dorso-ventral patterning function through a Gli3-derepression mechanism, Shh signaling is additionally required to promote the timely appearance of motor neuron progenitors in the developing spinal cord.