The endocrine-secreting lobe of the pituitary gland, or adenohypophysis, forms from cells at the anterior margin of the neural plate through inductive interactions involving secreted morphogens of the Hedgehog (Hh), fibroblast growth factor (FGF), and bone morphogenetic protein (BMP) families. To better understand when and where Hh signaling influences pituitary development, we have analyzed the effects of blocking Hh signaling both pharmacologically (cyclopamine treatments) and genetically (zebrafish Hh pathway mutants). While current models state that Shh signaling from the oral ectoderm patterns the pituitary after placode induction, our data suggest that Shh plays a direct early role in both pituitary induction and patterning, and that early Hh signals comes from adjacent neural ectoderm. We report that Hh signaling is necessary between 10 and 15 h of development for induction of the zebrafish adenohypophysis, a time when shh is expressed only in neural tissue. We show that the Hh responsive genes ptc1 and nk2.2 are expressed in preplacodal cells at the anterior margin of the neural tube at this time, indicating that these cells are directly receiving Hh signals. Later (15-20 h) cyclopamine treatments disrupt anterior expression of nk2.2 and Prolactin, showing that early functional patterning requires Hh signals. Consistent with a direct role for Hh signaling in pituitary induction and patterning, overexpression of Shh results in expanded adenohypophyseal expression of lim3, expansion of nk2.2 into the posterior adenohypophysis, and an increase in Prolactin- and Somatolactin-secreting cells. We also use the zebrafish Hh pathway mutants to document the range of pituitary defects that occur when different elements of the Hh signaling pathway are mutated. These defects, ranging from a complete loss of the adenohypophysis (smu/smo and yot/gli2 mutants) to more subtle patterning defects (dtr/gli1 mutants), may correlate to human Hh signaling mutant phenotypes seen in Holoprosencephaly and other congenital disorders. Our results reveal multiple and distinct roles for Hh signaling in the formation of the vertebrate pituitary gland, and suggest that Hh signaling from neural ectoderm is necessary for induction and functional patterning of the vertebrate pituitary gland.