Hedgehog (Hh) is an evolutionary conserved signaling pathway that has important functions in kidney morphogenesis and adult organ maintenance. Recent work has shown that Hh signaling is reactivated in the kidney after injury and is an important mediator of progressive fibrosis. Pericytes and fibroblasts have been proposed to be the principal cells that respond to Hh ligands, and pharmacological attenuation of Hh signaling has been considered as a possible treatment for fibrosis, but the effect of Hh inhibition on tubular epithelial cells after kidney injury has not been reported. Using genetically modified mice in which tubule-derived hedgehog signaling is increased and mice in which this pathway is conditionally suppressed in pericytes that express the proteoglycan neuron glial protein 2 (NG2), we found that suppression of Hh signaling is associated with decreased macrophage infiltration and tubular proliferation but also increased tubular apoptosis, an effect that correlated with the reduction of tubular β-catenin activity. Collectively, our data suggest a complex function of hedgehog signaling after kidney injury in initiating both reparative and proproliferative, prosurvival processes.