Erectile dysfunction (ED) has high impact on quality of life in prostatectomy, diabetic and aging patients. An underlying mechanism is cavernous nerve (CN) injury, which causes ED in up to 80% of prostatectomy patients. We examine how sonic hedgehog (SHH) treatment with innovative peptide amphiphile nanofiber hydrogels (PA), promotes CN regeneration after injury. SHH and its receptors patched (PTCH1) and smoothened (SMO) are localized in PG neurons and glia. SMO undergoes anterograde transport to signal to down stream targets. With crush injury, PG neurons degenerate and undergo apoptosis. SHH protein decreases, SMO localization changes to the neuronal cell surface, and anterograde transport stops. With SHH treatment SHH is taken up at the injury site and undergoes retrograde transport to PG neurons, allowing SMO transport to occur, and neurons remain intact. SHH treatment prevents neuronal degeneration, maintains neuronal, glial and down stream target signaling, and is significant as a regenerative therapy.