Hematopoietic stem cells (HSCs) represent a subset of bone marrow cells that are capable of self-renewal and of giving rise to all types of blood cells. However, the mechanisms involved in controlling the differentiation and self-renewal of HSCs remain largely unknown. The Indian hedgehog (Ihh) signal has been shown to play an essential role in inducing hematopoietic tissue during embryogenesis. We investigated the roles of the Ihh in postnatal hematopoiesis using coculture system between CD34+ cells and human stromal cells. Ihh gene transfer into hTERT-stromal cells enhanced the expression of BMP4, angiopoietin-1 and Wnt5A, and their hematopoietic supporting potential was elevated compared with control stromal cells, as indicated by the colony-forming units in culture (CFU-C, 26±2 vs. 59±3-fold of the initial cell number; CFU-Mix, 63±37 vs. 349±116). Engraftments of NOD/SCID-ß2mnull repopulating cells (RCs) at 8 weeks post-transplantation expanded on Ihh-stromal cells were significantly higher compared with control coculture results and engraftments were neutralized by addition of an anti-hedgehog antibody. Limiting dilution analysis indicated that SCID RCs proliferated more efficiently on Ihh-stromal cells than those on control stromal cells. The degree of expansion on Ihh-stromal cells was estimated to be 6.6-fold greater than that of control stromal cells, according to the Poisson predicted frequency. However, engraftment of NOD/SCID-ß2mnull RCs was decreased by 13 weeks post-transplantation of hematopoietic cells that had been expanded on either Ihh-stromal cells or control stromal cells, although engraftment of human hematopoietic cells that were expanded on Ihh-stromal cells is higher than that for cells expanded on control stromal cells (%CD45+ cells: 3.28±0.60 vs. not detected). These results suggest that Ihh-stromal cells are quite potent to support human short-term RCs in NOD/SCID-ß2mnull mice. Thus, hedgehog signaling is considered to play an important role in the hematopoietic microenvironment.