To characterize the process of vertebral segmentation and disc formation in living animals, we analyzed tiggy-winkle hedgehog (twhh):green fluorescent protein (gfp) and sonic hedgehog (shh):gfp transgenic zebrafish models that display notochord-specific GFP expression. We found that they showed distinct patterns of expression in the intervertebral discs of late stage fish larvae and adult zebrafish. A segmented pattern of GFP expression was detected in the intervertebral disc of twhh:gfp transgenic fish. In contrast, little GFP expression was found in the intervertebral disc of shh:gfp transgenic fish. Treating twhh:gfp transgenic zebrafish larvae with exogenous retinoic acid (RA), a teratogenic factor on normal development, resulted in disruption of notochord segmentation and formation of oversized vertebrae. Histological analysis revealed that the oversized vertebrae are likely due to vertebral fusion. These studies demonstrate that the twhh:gfp transgenic zebrafish is a useful model for studying vertebral segmentation and disc formation, and moreover, that RA signaling may play a role in this process.