Cardiac outflow tract (OFT) septation is crucial to the formation of the aortic and pulmonary arteries. Defects in the formation of the OFT can result in serious congenital heart defects. Two cell populations, the anterior heart field (AHF) and cardiac neural crest cells (CNCCs), are crucial for OFT development and septation. In this study, we use a series of tissue-specific genetic manipulations to define the crucial role of the Hedgehog pathway in these two fields of cells during OFT development. These data indicate that endodermally-produced SHH ligand is crucial for several distinct processes,all of which are required for normal OFT septation. First, SHH is required for CNCCs to survive and populate the OFT cushions. Second, SHH mediates signaling to myocardial cells derived from the AHF to complete septation after cushion formation. Finally, endodermal SHH signaling is required in an autocrine manner for the survival of the pharyngeal endoderm, which probably produces a secondary signal required for AHF survival and for OFT lengthening. Disruption of any of these steps can result in a single OFT phenotype.