In this study we examined the intersection of two molecular pathways both known to regulate dentate development – the Emx2 transcription factor and the Sonic Hedgehog (Shh) morphogenic scignaling pathway. We confirmed that Emx2 mutant mice have a markedly reduced dentate gyrus and studied evidence of changes in Shh signaling and Shh expression in these mutants. Our results indicate that loss of Emx2 affects the numbers and distribution of Gli+ ventrally derived dentate neural stem cells that are responsible for populating the perinatal dentate gyrus. Accompanying this, we find that Emx2 mutants have reduced expression of Shh in the amygdalo-hippocampal region. In addition, there are ectopic Shh responsive progenitors that fail to properly populate the dentate. Taken together our results indicate that Emx2 regulates dentate development in part by altering availability and signaling of Shh.