Division of the telencephalic vesicle into hemispheres and specification of the cerebral cortex are key stages in forebrain development. We investigate the interplay in these processes of Sonic hedgehog (Shh), fibroblast growth factors (Fgfs), and the transcription factor Gli3, which in its repressor form (Gli3R) antagonizes Shh signaling and downregulates expression of several Fgf genes.Contrary to previous reports, Shh is not required for dorsal hemisphere separation. Mice lacking Shh develop a dorsal telencephalic midline, a cortical hem, and two cortical hemispheres. The hemispheres do not divide rostrally, probably because of reduced local Fgf gene expression, resulting from the loss of Shh inhibition of Gli3R. Removing one functional copy of Gli3 substantially rescues Fgf expression and rostral telencephalic morphology.In mice lacking Gli3 function, cortical development is arrested, and ventral gene expression invades the dorsal telencephalon. These defects are potentially explained by disinhibition of Shh activity. However, when both copies of Shh are removed from Gli3-null mice, dorsal telencephalic defects persist. One such defect is a large dorsal expansion of the expression of Fgf genes. Fgf15 expression, for example, expands from a discrete ventral domain throughout the dorsal telencephalon. We propose that Fgf signaling, known to ventralize the telencephalon in a Shh-independent manner, suppresses cortical fate in the absence of Gli3. Our findings point away from Shh involvement in dorsal telencephalic patterning and encourage additional exploration of Fgf signaling and Gli3 repression in corticogenesis.