Sonic hedgehog (Shh) signaling controls many aspects of ontogeny, orchestrating congruent growth and patterning. During brain development, Shh regulates early ventral patterning while later on it is critical for the regulation of precursor proliferation in the dorsal brain, namely in the neocortex, tectum and cerebellum. We have recently shown that Shh also controls the behavior of cells with stem cell properties in the mouse embryonic neocortex, and additional studies have implicated it in the control of cell proliferation in the adult ventral forebrain and in the hippocampus. However, it remains unclear whether it regulates adult stem cell lineages in an equivalent manner. Similarly, it is not known which cells respond to Shh signaling in stem cell niches. Here we demonstrate that Shh is required for cell proliferation in the mouse forebrain's subventricular zone (SVZ) stem cell niche and for the production of new olfactory interneurons in vivo. We identify two populations of Gli1+ Shh signaling responding cells: GFAP+ SVZ stem cells and GFAP- precursors. Consistently, we show that Shh regulates the self-renewal of neurosphere-forming stem cells and that it modulates proliferation of SVZ lineages by acting as a mitogen in cooperation with epidermal growth factor (EGF). Together, our data demonstrate a critical and conserved role of Shh signaling in the regulation of stem cell lineages in the adult mammalian brain, highlight the subventricular stem cell astrocytes and their more abundant derived precursors as in vivo targets of Shh signaling, and demonstrate the requirement for Shh signaling in postnatal and adult neurogenesis.