Hedgehog signaling is important in the pathogenesis of pancreatic cancer. Several recent observations suggest the involvement of sonic hedgehog (SHH) in postnatal neovascularization. We identified a novel role for SHH in tumor-associated angiogenesis in pancreatic cancer. Immunohistochemical analysis revealed that patched homolog 1 (PTCH1), both a receptor for and transcriptional target of hedgehog signaling, was expressed in a small fraction of endothelial cells within pancreatic cancer, but not in normal pancreatic tissue. When endothelial progenitor cells (EPC) isolated from human peripheral blood were cultured with supernatant from SHH-transfected 293 cells or pancreatic cancer cells, mRNA levels of vascular endothelial growth factor (VEGF), stromal cell-derived factor-1 and angiopoietin-1 were significantly increased, whereas no such induction was observed in human umbilical vein endothelial cell (HUVEC) and human dermal microvascular endothelial cell (HMVEC). HUVEC tube formation was stimulated when cocultured with EPC, and preconditioning EPC with supernatant from KP-1 N pancreatic cancer cells highly expressing SHH significantly enhanced the effect. The effect was partially attenuated by specific inhibition of SHH with cyclopamine or a neutralizing antibody. These findings suggest that tumor-derived SHH can induce angiogenesis, and this is mediated by its effects on EPC specifically. Targeting SHH would be a novel therapeutic approach that can inhibit not only proliferation of cancer cells but also EPC-mediated angiogenesis.