Erectile dysfunction (ED) is a common and debilitating pathological development that affects up to 75% of diabetic males. Neural stimulation is a crucial aspect of the normal erection process. Nerve injury causes ED and disrupts signaling of the Sonic hedgehog (Shh) cascade in the smooth muscle of the corpora cavernosa. Shh and targets of its signaling establish normal corpora cavernosal morphology during postnatal differentiation of the penis and regulate homeostasis in the adult. Interruption of the Shh cascade in the smooth muscle of the corpora cavernosa results in extensive changes in corpora cavernosal morphology that lead to ED. Our hypothesis is that the neuropathy observed in diabetics causes morphological changes in the corpora cavernosa of the penis that result in ED. Disruption of the Shh cascade may be involved in this process. We tested this hypothesis by examining morphological changes in the penis, altered gene and protein expression, apoptosis, and bromodeoxyuridine incorporation in the BB/WOR rat model of diabetes. Extensive smooth muscle and endothelial degradation was observed in the corpora cavernosa of diabetic penes. This degradation accompanied profound ED, significantly decreased Shh protein in the smooth muscle of the corpora cavernosa, and increased penile Shh RNA expression in the intact penis (nerves, corpora, and urethra). Localization and expression of Shh targets were also disrupted in the corpora cavernosa. Increasing our understanding of the molecular mechanisms that regulate Shh signaling may provide valuable insight into improving treatment options for diabetic impotence.