Although recovery following a stroke is limited, undamaged neurons under the right conditions can establish new connections and take on-board lost functions. Sonic hedgehog (Shh) signaling is integral for developmental axon growth, but its role after injury has not been fully examined. To investigate the effects of Shh on neuronal sprouting after injury, we used an in vitro model of glial scar, whereby cortical astrocytes were mechanically traumatized to mimic reactive astrogliosis observed after stroke. This mechanical trauma impaired neurite outgrowth from post-natal cortical neurons plated on top of reactive astrocytes. Addition of Shh to the media, however, resulted in a concentration-dependent increase in neurite outgrowth. This response was inhibited by cyclopamine and activated by oxysterol 20(S)-hydroxycholesterol, both of which modulate the activity of the Shh co-receptor Smoothened (Smo), demonstrating that Shh-mediated neurite outgrowth is Smo-dependent. In addition, neurite outgrowth was not associated with an increase in Gli-1 transcription, but could be inhibited by PP2, a selective inhibitor of Src family kinases. These results demonstrate that neurons exposed to the neurite growth inhibitory environment associated with a glial scar can be stimulated by Shh, with signaling occurring through a non-canonical pathway, to overcome this suppression and stimulate neurite outgrowth.