BACKGROUND: Nonhealing bone defects represent an immense biomedical burden. Despite recent advances in protein-based bone regeneration, safety concerns over bone morphogenetic protein-2 have prompted the search for alternative factors. Previously, the authors examined the additive/synergistic effects of hedgehog and Nel-like protein-1 (NELL-1) on the osteogenic differentiation of mesenchymal stem cells in vitro. In this study, the authors sought to leverage their previous findings by applying the combination of Smoothened agonist (SAG), hedgehog signal activator, and NELL-1 to an in vivo critical-size bone defect model. METHODS: A 4-mm parietal bone defect was created in mixed-gender CD-1 mice. Treatment groups included control (n = 6), SAG (n = 7), NELL-1 (n = 7), and SAG plus NELL-1 (n = 7). A custom fabricated poly(lactic-co-glycolic acid) disk with hydroxyapatite coating was used as an osteoinductive scaffold. RESULTS: Results at 4 and 8 weeks showed increased bone formation by micro-computed tomographic analyses with either stimulus alone (SAG or NELL-1), but significantly greater bone formation with both components combined (SAG plus NELL-1). This included greater bone healing scores and increased bone volume and bone thickness. Histologic analyses confirmed a significant increase in new bone formation with the combination therapy SAG plus NELL-1, accompanied by increased defect vascularization. CONCLUSIONS: In summary, the authors' results suggest that combining the hedgehog signaling agonist SAG and NELL-1 has potential as a novel therapeutic strategy for the healing of critical-size bone defects. Future directions will include optimization of dosage and delivery strategy for an SAG and NELL-1 combination product.