Tail regeneration in urodeles requires the coordinated growth and patterning of the regenerating tissues types, including the spinal cord, cartilage and muscle. The dorsoventral (DV) orientation of the spinal cord at the amputation plane determines the DV patterning of the regenerating spinal cord as well as the patterning of surrounding tissues such as cartilage. We investigated this phenomenon on a molecular level. Both the mature and regenerating axolotl spinal cord express molecular markers of DV progenitor cell domains found during embryonic neural tube development, including Pax6, Pax7 and Msx1. Furthermore, the expression of Sonic hedgehog (Shh) is localized to the ventral floor plate domain in both mature and regenerating spinal cord. Patched1 receptor expression indicated that hedgehog signaling occurs not only within the spinal cord but is also transmitted to the surrounding blastema. Cyclopamine treatment revealed that hedgehog signaling is not only required for DV patterning of the regenerating spinal cord but also had profound effects on the regeneration of surrounding, mesodermal tissues. Proliferation of tail blastema cells was severely impaired, resulting in an overall cessation of tail regeneration, and blastema cells no longer expressed the early cartilage marker Sox9. Spinal cord removal experiments revealed that hedgehog signaling, while required for blastema growth is not sufficient for tail regeneration in the absence of the spinal cord. By contrast to the cyclopamine effect on tail regeneration, cyclopamine-treated regenerating limbs achieve a normal length and contain cartilage. This study represents the first molecular localization of DV patterning information in mature tissue that controls regeneration. Interestingly, although tail regeneration does not occur through the formation of somites, the Shh-dependent pathways that control embryonic somite patterning and proliferation may be utilized within the blastema, albeit with a different topography to mediate growth and patterning of tail tissues during regeneration.