Shh (Sonic Hedgehog) is a morphogen involved in gastric fundic gland differentiation in the adult. Shh expression is reduced in Helicobacter pylori-associated intestinal metaplastic change of the gastric epithelium and mice that lack Shh show intestinal transformation of the gastric mucosa. Similarly, in the stomach of Cdx2 (caudal-type homeobox 2)-transgenic mice, the gastric mucosa is replaced by intestinal metaplastic mucosa. The aim of the present study was to use Cdx2-transgenic mice to investigate: (i) Shh expression in the intestinal metaplastic mucosa of the Cdx2-transgenic mouse stomach; and (ii) the relationship between Shh and Cdx2. We determined that Shh mRNA levels were dramatically reduced in the intestinal metaplastic mucosa of the Cdx2-transgenic mouse stomach compared with the normal (wild-type) mouse stomach. This was not due to hypermethylation of the Shh promoter, but instead we showed that Cdx2 directly bound to the TATA box region of the Shh promoter. Cdx2 also down-regulated transcription of the Shh gene in the human gastric carcinoma cell lines AGS, MKN45 and MKN74. In conclusion, Cdx2 reduced Shh expression by binding to the unmethylated Shh promoter in the intestinal metaplastic mucosa of Cdx2-transgenic mouse stomach.