Enteric neural crest cells (NCCs) migrate and colonize the entire gut and proliferate and differentiate into neurons and glia of the enteric nervous system in vertebrate embryos. We have investigated the mitogenic and morphogenic functions of Sonic hedgehog (Shh) on enteric NCCs in cell and organ culture. Enteric NCCs expressed Shh receptor Patched and transcripts encoding the Shh signal transducer (Gli1). Shh promoted the proliferation and inhibited the differentiation of NCCs. The pro-neurogenic effect of glial cell line--derived neurotrophic factor (GDNF) on NCCs was abolished by Shh. In gut explants, NCCs migrated from the explants onto the adjacent substratum if GDNF was added, whereas addition of Shh abolished this migration. Neuronal differentiation and coalescence of neural crest--derived cells into myenteric plexuses in explants was repressed by the addition of Shh. Our data suggest that Shh controls the proliferation and differentiation of NCCs and modulates the responsiveness of NCCs toward GDNF inductions.