p63 and p73 are members of the p53 protein family and have been shown to play an important role in cell death, development, and tumorigenesis. In particular, p63 has been shown to be involved in the maintenance of epidermal stem cells and in the stratification of the epidermis. Sonic Hedgehog (Shh) is a morphogen that has also been implicated to play a role in epithelial stem cell proliferation and in the development of organs. Recently, Shh has also been shown to play an important role in the progression of a variety of cancers. In this report, we show that p63 and p73 but not p53 overexpression induces Shh expression. In particular, p63γ and p63β (both TA and ΔN isoforms) and TAp73β isoform induce Shh. Expression of Shh was found to be significantly reduced in mouse embryo fibroblasts obtained from p63-/- mice. The naturally occurring p63 mutant TAp63γ(R279H) and the tumor suppressor protein p14ARF inhibited the TAp63γ-mediated transactivation of Shh. The region -228 to -102 bp of Shh promoter was found to be responsive to TAp63γ-induced transactivation and TAp63γ binds to regions within the Shh promoter in vivo. The results presented in this study implicate p63 in the regulation of the Shh signaling pathway.