Nerves and blood vessels have similar branching patterns and use common morphogenic molecules during development. Recent studies show that sonic hedgehog (Shh), a traditional neurogenic morphogen, is required for embryonic arterial differentiation and can induce angiogenesis. We investigated whether Shh regulates the expression of angiogenic factors. Using NIH3T3 embryonic fibroblast cells, we demonstrated that Shh increased the mRNA levels of angiopoietin-1 (Ang-1), a secreted ligand that regulates endothelial interaction with mural cells (pericytes and smooth muscle cells) and promotes blood vessel maturation. In contrast, Shh decreased mRNA levels of angiopoietin-2 (Ang-2), a negative modulator of Ang-1. By contrast, Shh did not change the expression of vascular endothelial growth factor (VEGF) mRNA, a potent endothelial mitogen. The effect of Shh appeared to be cell-type specific as the addition of Shh to neural progenitor cells or neurons did not alter Ang-1, Ang-2 or VEGF mRNA levels. The addition of cyclopamine, an inhibitor of Shh signaling, to NIH3T3 cells, suppressed the regulation of Ang-1 and Ang-2 mRNA levels in the presence of Shh. Collectively, our results suggest that Shh may contribute to blood vessel growth, maturation and stabilization in a neurovascular network by reciprocally regulating the vascular morphogens Ang-1 and Ang-2 in a cell-type-specific manner.