Sonic hedgehog (Shh) signaling is essential to the patterning of the embryonic neural tube, but its presence and function in the postmitotic differentiated neurons in the brain remain largely uncharacterized. We recently showed that Shh and its signaling components, Patched and Smoothened, are expressed in postnatal and adult hippocampal neurons. We have now examined whether Shh signaling has a function in these neurons. Using cultured hippocampal neurons as a model system, we found that presynaptic terminals become significantly larger in response to the application of Shh. Ultrastructural examination confirmed the enlarged presynaptic profiles and also revealed variable increases in the size of synaptic vesicles, with a resulting loss of uniformity. Furthermore, electrophysiological analyses showed significant increases in the frequency, but not the amplitude, of spontaneous miniature excitatory postsynaptic currents (mEPSCs) in response to Shh, providing functional evidence of the selective role of Shh in presynaptic terminals. Thus, we conclude that Shh signaling regulates the structure and functional properties of presynaptic terminals of hippocampal neurons.