Sonic Hedgehog (Shh) is a critical signaling factor for a variety of developmental pathways during embryogenesis, including the specification of left-right asymmetry in the heart. Mice that lack Hedgehog signaling show a delay in the induction of cardiomyogenesis, as indicated by a delayed expression of Nkx2-5. To further examine a role for Shh in cardiomyogenesis, clonal populations of P19 cells that stably express Shh, termed P19(Shh) cells, were isolated. In monolayer P19(Shh) cultures the Shh pathway was functional as shown by the up-regulation of Ptc1 and Gli1 expression, but no cardiac muscle markers were activated. However, Shh expression induced cardiomyogenesis following cellular aggregation, resulting in the expression of factors expressed in cardiac muscle including GATA-4, MEF2C, and Nkx2-5. Furthermore, aggregated P19 cell lines expressing Gli2 or Meox1 also up-regulated the expression of cardiac muscle factors, leading to cardiomyogenesis. Meox1 up-regulated the expression of Gli1 and Gli2 and, thus, can modify the Shh signaling pathway. Finally, Shh, Gli2, and Meox1 all up-regulated BMP-4 expression, implying that activation of the Hedgehog pathway can regulate bone morphogenetic protein signals. Taken together, we propose a model in which Shh, functioning via Gli1/2, can specify mesodermal cells into the cardiac muscle lineage.