Hedgehog (Hh) ligands bind to the Patched1 (Ptch1) receptor, relieving repression of Smoothened, which leads to activation of the Hh signaling pathway. Using conditional Ptch1 knockout mice, the aim of this study was to determine the effects of activating the Hh signaling pathway in hematopoiesis. Surprisingly, hematopoietic-specific deletion of Ptch1 did not lead to activation of the Hh signaling pathway and, consequently, had no phenotypic effect. In contrast, deletion of Ptch1 in nonhematopoietic cells produced 2 distinct hematopoietic phenotypes. First, activation of Hh signaling in epithelial cells led to apoptosis of lymphoid progenitors associated with markedly elevated levels of circulating thymic stromal lymphopoietin. Second, activation of Hh signaling in the bone marrow cell niche led to increased numbers of lineage-negative c-kit⁺ Sca-1⁺ bone marrow cells and mobilization of myeloid progenitors associated with a marked loss of osteoblasts. Thus, deletion of Ptch1 leads to hematopoietic effects by distinct cell-extrinsic mechanisms rather than by direct activation of the Hh signaling pathway in hematopoietic cells. These findings have important implications for therapeutics designed to activate the Hh signaling pathway in hematopoietic cells including hematopoietic stem cells.