The role of hedgehog (Hh) signaling in B lymphopoiesis has remained unclear. We observed that the proliferation of pro-B cells in stromal cocultures was impaired by interruption of Hh signaling, prompting us to investigate whether the target of Hh antagonism was intrinsic or extrinsic to the B-lymphoid compartment. In the present study, using conditional deletion of the pathway activator gene Smo, we found that cell-autonomous Hh signaling is dispensable for B-cell development, B-lymphoid repopulation of the BM, and humoral immune function. In contrast, depletion of the Smo protein from stromal cells was associated with impaired generation of B-lymphoid cells from hematopoietic stem progenitor cells, whereas reciprocal removal of Smo from these cells had no effect on the production of B-cell progenitors. Depletion of Smo from stromal cells was associated with coordinate down-regulation of genes for which expression is associated with osteoblastoid identity and B-lymphopoietic activity. The results of the present study suggest that activity of the Hh pathway within stromal cells promotes B lymphopoiesis in a non-cell-autonomous fashion.