The adrenal capsule is postulated to harbor stem/progenitor cells, the progenies of which contribute to the growth of adrenocortex. We discovered that cells in the adrenal capsule are positive for Ptch1 and Gli1, genes indicative of responsiveness to the stimulation of Hedgehog (Hh) ligands. On the other hand, Sonic hedgehog (Shh), one of the mammalian Hh ligands, is expressed in the adrenocortex underneath the adrenal capsule, possibly acting upon the Hh-Responsive capsule. To investigate the functional significance of Shh in adrenal growth, we ablated Shh in an adrenocortex-specific manner using the Steroidogenic factor 1-Cre mouse. Loss of Shh in the adrenocortex led to reduced proliferation of capsular cells and a 50-75% reduction in adrenocortex thickness and adrenal size. The remaining adrenocortex underwent proper zonation and was able to synthesize steroids, indicating that Shh is dispensable for differentiation of adrenocortex. When these animals reached adulthood, their adrenocortex did not undergo compensatory growth in response to a high level of plasma ACTH, and the size of the adrenal remained significantly smaller than the control adrenal. Using a genetic lineage-tracing model, we further demonstrated that the Hh-responding cells in the adrenal capsule migrated centripetally into the adrenocortex. Our results not only provide the genetic evidence to support that the adrenal capsule contributes to the growth of adrenocortex in both fetal and adult life but also identify a novel role of Shh in this process.