Gut mesenchyme provides key stem cell niche signals such as Wnt ligands, but how these signals are regulated is unclear. Because Hedgehog (Hh) signaling is critical for gut mesenchymal development and tumorigenesis, we investigated Hh-mediated mechanisms by analyzing mice deleted for key negative regulators of Hh signaling, Sufu and/or Spop, in the gut mesenchyme, and demonstrated their dosage-dependent roles.