Dorsal-ventral pattern formation of the neural tube is regulated by temporal and spatial activities of extracellular signalling molecules. Sonic hedgehog (Shh) assigns ventral neural subtypes via activation of the Gli transcription factors. Shh activity in the neural progenitor cells changes dynamically during differentiation, but the mechanisms regulating this dynamicity are not fully understood. Here, we show that temporal change of intracellular cAMP levels confers the temporal Shh signal, and the purinergic G-protein-coupled receptor GPR17 plays an essential role in this regulation. GPR17 is highly expressed in the ventral progenitor regions of the neural tube and acts as a negative regulator of the Shh signal in chick embryos. Although the activation of the GPR17-related signal inhibits ventral identity, perturbation of Gpr17 expression leads to aberrant expansion of ventral neural domains. Notably, perturbation of Gpr17 expression partially inhibits the negative feedback of Gli activity. Moreover, GPR17 increases cAMP activity, suggesting that it exerts its function by inhibiting the processing of Gli3 protein. GPR17 also negatively regulates Shh signalling in neural cells differentiated from mouse embryonic stem cells, suggesting that GPR17 function is conserved among different organisms. Our results demonstrate that GPR17 is a novel negative regulator of Shh signalling in a wide range of cellular contexts.