Indian hedgehog (Ihh) is an essential signal that regulates endochondral bone development. We have previously shown that Wnt7b promotes osteoblast differentiation during mouse embryogenesis, and that its expression in the perichondrium is dependent on Ihh signaling. To test the hypothesis that Wnt7b may mediate some aspects of Ihh function during endochondral bone development, we activated Wnt7b expression from the R26-Wnt7b allele with Col2-Cre in the Ihh(-/-) mouse. Artificial expression of Wnt7b rescued vascularization of the hypertrophic cartilage in the Ihh(-/-) mouse, but failed to restore orthotopic osteoblast differentiation in the perichondrium. Similarly, Wnt7b did not recover Ihh-dependent perichondral bone formation in the Ihh(-/-); Gli3(-/-) embryo. Interestingly, Wnt7b induced bone formation at the diaphyseal region of long bones in the absence of Ihh, possibly due to increased vascularization in the area. Thus, Ihh-dependent expression of Wnt7b in the perichondrium may contribute to vascularization of the hypertrophic cartilage during endochondral bone development.