Abstract Mutations in SHH are associated with holoprosencephaly syndromes, with craniofacial malformations ranging from cyclopia to cleft lip/palate to midfacial and mandibular hypoplasia. Mouse embryos lacking Shh exhibit cyclopia and fail to form maxilla and mandible. Tissue-specific inactivation of Shh in the embryonic pharyngeal epithelium (Shhpeko) or neural crest cell-specific inactivation of Smo (Smoncko), which encodes an obligatory transducer of hedgehog signaling, results in severe micrognathia and tongue agenesis in mice. Both Shhpeko and Smoncko embryos showed increased apoptosis of neural crest cells populating the embryonic mandibular arches, but little is known about the molecular mechanisms mediating Shh signaling regulation of mandible development. We found that the Smoncko mutant embryos exhibit ectopic ossification in the oral side of the embryonic mandibular mesenchyme, leading to partial duplication of the dentary bones. Furthermore, we found that phospho-Smad1/5/9 and BMP target genes Msx1, Msx2, and Alx4, exhibit preferential expression in the aboral side of the distal mandibular arch mesenchyme in wildtype embryos but are ectopically activated in the oral side of the mandibular arch mesenchyme in Smoncko mutant embryos. Since Bmp4 is expressed in the distal mandibular arch epithelium, whereas Shh is expressed in the oral epithelium during early mandibular development, and since BMP signaling is known to regulate apoptosis and bone formation, these results suggest a crucial, but previously unappreciated, mechanism involving interactions of Shh and Bmp4 signaling pathways in patterning the oral-aboral axis of the developing mandible. We proposed two comprehensive specific aims to test the hypothesis that Shh signaling regulates the Bmp4-Msx1/2 and Bmp4-Alx4 pathways to control survival and patterning of the developing mandibular mesenchyme along the oral-aboral axis. These studies will fill a longstanding gap in the understanding of molecular mechanisms patterning the oral-aboral axis of the mammalian jaw and significantly improve our understanding of pathogenic mechanisms of mandibular developmental defects.