Sonic hedgehog (Shh) is a morphogen critically involved in development that is reexpressed in atherosclerotic lesions. It also stimulates proliferation of vascular smooth muscle cells (SMCs). Autophagy in vascular SMCs is known to promote SMC survival and increase plaque stability. The aim of this study was to investigate whether Shh induces autophagy of vascular SMCs. Our study showed that both Shh protein and microtubule-associated protein 1 light chain 3 (LC3)-II were increased in SMCs within neointimal lesions of mouse common carotid arteries. In cultured mouse aortic SMCs, recombinant mouse Shh stimulated LC3-II levels. Overexpression of wild-type mouse Shh through the tetracycline-regulated expression-inducible system in human aortic SMCs time-dependently increased the levels of LC3-II and also stimulated protein kinase B (AKT) phosphorylation. Pretreatment with AKT inhibitor IV (AKTI IV) inhibited AKT phosphorylation and the increase in LC3-II. Shh-induced autophagy was further confirmed by the formation of autophagosomes as detected by immunostaining and transmission electron microscopy, which was inhibited by AKTI IV. Shh further increased SMC LC3-II in the presence of bafilomycin A1, (2S,3S)-trans-epoxysuccinyl-L-leucylamido-3-methylbutane ethyl ester, and pepstatin A or siRNA for the autophagy-related gene 7 (ATG7). In addition, Shh induced SMC proliferation, which was inhibited not only by AKTI IV but also by cyclopamine, an inhibitor of Shh receptor. Inhibition of autophagy with 3-methyladenine (3-MA), bafilomycin A1, or ATG7 siRNA resulted in inhibition of cell proliferation. Treatment with 3-MA, AKTI IV, or cyclopamine inhibited neointima formation in mouse common carotid arteries. Taken together, our results have shown that Shh induces autophagy of vascular SMCs involving AKT activation, suggesting a role of autophagy in Shh-induced cellular responses.