VACTERL represents a non-random association of congenital anomalies in humans of poorly known etiology and pathogenesis. From our mutant analysis of Gli genes, which encode transcription factors mediating Sonic hedgehog (Shh) signal transduction, we observed that defective Shh signaling leads to a spectrum of developmental anomalies in mice strikingly similar to those of VACTERL. In this review, we will discuss the function of the three Gli transcription factors in Shh signaling and mammalian development. We propose that VACTERL could be caused by defective Shh signaling during human embryogenesis and suggest that the Gli mutant mice can serve as useful models for studying the pathogenesis of VACTERL.