The Hedgehog intercellular signaling pathway regulates cell proliferation and differentiation. This pathway has been implicated to play a role in the pathogenesis of cancer and in embryonic blood vessel development. In the current study, Hedgehog signaling in tumor related vasculature and microenvironment was examined using human umbilical vein endothelial cells and B16F0 (murine melanoma) tumors models. Use of exogenous Sonic hedgehog (Shh) peptide significantly increased BrdU incorporation in endothelial cells in vitro by a factor of 2 (P < 0.001). The Hedgehog pathway antagonist cyclopamine effectively reduced Shh-induced proliferation to control levels. To study Hedgehog signaling in vivo a hind limb tumor model with the B16F0 cell line was used. Treatment with 25 mg/kg cyclopamine significantly attenuated BrdU incorporation in tumor cells threefold (P < 0.001), in tumor related endothelial cells threefold (P = 0.004), and delayed tumor growth by 4 days. Immunohistochemistry revealed that the Hedgehog receptor Patched was localized to the tumor stroma and that B16F0 cells expressed Shh peptide. Furthermore, mouse embryonic fibroblasts required the presence of B16F0 cells to express Patched in a co-culture assay system. These studies indicate that Shh peptide produced by melanoma cells induces Patched expression in fibroblasts. To study tumor related angiogenesis a vascular window model was used to monitor tumor vascularity. Treatment with cyclopamine significantly attenuated vascular formation by a factor of 2.5 (P < 0.001) and altered vascular morphology. Furthermore, cyclopamine reduced tumor blood vessel permeability to FITC labeled dextran while having no effect on normal blood vessels. These studies suggest that Hedgehog signaling regulates melanoma related vascular formation and function.