The sinusoid anatomy of the penis is complex and requires complicated interaction between smooth muscle and endothelium in order to maintain homeostasis in the adult. The morphogen, Sonic hedgehog (Shh), is a crucial regulator of these processes, along with its down stream targets patched (Ptc), Hox, bone morphogenetic proteins (BMPs), vascular endothelial growth factor (VEGF) and nitric oxide synthase (NOS). Shh is critical for patterning and establishing tissue identity of the penis during embryonic development, is a crucial regulator of penile postnatal differentiation of the sinusoid morphology of the corpora cavernosa, and plays a fundamental role in maintaining sinusoidal structures pertinent to erectile function in the adult rat. Shh and its targets are active in human penes, and decreased in human diabetic penes in parallel with observations in the rat, thus lending clinical significance to the role of abnormal Shh signaling in erectile dysfunction (ED). Application of exogenous Shh protein to rat corpora cavernosa, induces VEGF and NOS proteins, suggesting a potential mechanism through which decreased Shh protein can cause ED. The studies outlined in this review provide in depth analysis of the Shh pathway and signal transduction, its role in penile development, how Shh signaling is altered in a rat model of ED and neuropathy, how abnormal Shh signaling can cause ED, and the clinical significance of the Shh pathway to human ED. These studies will provide valuable insight, at the molecular level, into understanding the mechanisms that under lie ED and lead to new treatment strategies for diabetic impotence.