Hair follicle stem cells are regulated by dermal papilla fibroblasts, their principal signaling niche. Overactivation of Hedgehog signaling in the niche dramatically accelerates hair growth and induces follicle multiplication in mice. On single-cell RNA sequencing, dermal papilla fibroblasts increase heterogeneity to include new Wnt5ahigh states. Transcriptionally, mutant fibroblasts activate regulatory networks for Gli1, Alx3, Ebf1, Hoxc8, Sox18, and Zfp239. These networks jointly upregulate secreted factors for multiple hair morphogenesis and hair-growth-related pathways.