Although sonic hedgehog (SHH), an essential molecule in embryogenesis and organogenesis, stimulates proliferation of human periodontal ligament (PDL) stem cells, the effects of recombinant human SHH (rh-SHH) on osteoblastic differentiation are unclear. To reveal the role of SHH in periodontal regeneration, expression of SHH in mouse periodontal tissues and its effects on the osteoblastic/cementoblastic differentiation in human cementoblasts were investigated. SHH is immunolocalized to differentiating cementoblasts, PDL cells, and osteoblasts of the developing mouse periodontium. Addition of rh-SHH increased cell growth, ALP activity, and mineralization nodule formation, and upregulated mRNA expression of osteoblastic and cementoblastic markers. The osteoblastic/cementoblastic differentiation of rh-SHH was abolished by the SHH inhibitor cyclopamine (Cy) and the BMP antagonist noggin. rh-SHH increased the expression of BMP-2 and -4 mRNA, as well as levels of phosphorylated Akt, ERK, p38, and JNK, and of MAPK and NF-κB activation, which were reversed by noggin, Cy, and BMP-2 siRNA. Collectively, this study is the first to demonstrate that SHH can promote cell growth and cell osteoblastic/cementoblastic differentiation via BMP pathway. Thus, SHH plays important roles in the development of periodontal tissue, and might represent a new therapeutic target for periodontitis and periodontal regeneration.