The hedgehog family of morphogens are regulators of cell proliferation, differentiation and cell-cell communication. These morphogens have been shown to have important roles in organogenesis, spermatogenesis, stem cell maintenance and oncogenesis. Indian hedgehog (encoded by Ihh) has been shown to be expressed in the uterine epithelium under the control of the steroid hormone, progesterone. Although in vivo and in vitro studies have shown that progesterone achieves its effects on uterine function through epithelial-stromal cross-talk, molecular mediator(s) for this cellular communication pathway have not been elucidated. Using new experimental approaches that ablate Ihh specifically in Pgr-positive uterine cells of the mouse, we demonstrate that Ihh is an essential mediator of Pgr action in the uterus, and expression of this factor is critical in mediating the communication between the uterine epithelium and stroma required for embryo implantation.