Retinal ganglion cell (RGC) axons have been shown to stimulate the proliferation of astrocytes in the developing rodent optic nerve, but the signals that mediate this effect have not been identified. The following findings suggest that Sonic hedgehog (Shh) is one of the signals. (1) RGCs express both Shh mRNA and protein, whereas the optic nerve contains the protein but not the mRNA. (2) Astrocytes and their precursors in the developing optic nerve express the Hedgehog (Hh) receptor gene Patched (Ptc), suggesting that they are being signalled by an Hh protein. (3) Ptc expression in the nerve is greatly decreased by either nerve transection or by treatment with neutralizing anti-Shh antibodies, suggesting that it depends on axon-derived Shh. (4) Astrocyte proliferation in the developing nerve is reduced by treatment with anti-Shh antibodies, suggesting that Shh normally helps stimulate this proliferation.