Vertebrate retinal progenitor cells (RPCs) undergo a robust proliferative expansion to produce enough cells for the retina to form appropriately. Vsx2 (formerly Chx10), a homeodomain protein expressed in RPCs, is required for sufficient proliferation to occur. Sonic Hedgehog protein (SHH), secreted by retinal ganglion cells (RGCs), activates Hedgehog (Hh) signaling in RPCs and is also required for sufficient proliferation to occur. Therefore, we sought to determine if reduced Hh signaling is a contributing factor to the proliferation changes that occur in the absence of Vsx2. To do this, we examined Shh expression and Hh signaling activity in the homozygous ocular retardation J (orJ) mouse, which harbors a recessive null allele in the Vsx2 gene. We found that Shh expression and Hh signaling activity are delayed during early retinal development in orJ mice and this correlates with a delay in the onset of RGC differentiation. At birth, reduced expression of genes regulated by Hh signaling was observed despite the production of SHH ligand. orJ RPCs respond to pre-processed recombinant SHH ligand (SHH-N) in explant culture as evidenced by increased proliferation and expression of Hh target genes. Interestingly, proliferation in the orJ retina is further inhibited by cyclopamine, an antagonist of Hh signaling. Our results suggest that reduced Hh signaling contributes to the reduced level of RPC proliferation in the orJ retina, thereby revealing a role for Vsx2 in mediating mitogen signaling.