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Recently, the novel Hh agonists Hh\u2010Ag 1.3 and 1.7 were identified in a high\u2010throughput screening of small molecule compounds that activate the expression of <jats:italic>Gli1<\/jats:italic>, a target of Hh signaling. This study demonstrates that Hh\u2010Ag 1.3 and 1.7 strongly activate the expression of endogenous <jats:italic>Gli1<\/jats:italic> and promote osteoblast differentiation in the mesenchymal stem cell line C3H10T1\/2. Both compounds stimulated alkaline phosphatase activity in a dose\u2010dependent manner, and induced osteoblast marker gene expression in C3H10T1\/2 cells, which indicated that they had acquired an osteoblast identity. Of the markers, the expression of <jats:italic>osterix\/Sp7<\/jats:italic>, a downstream target of <jats:italic>runt\u2010related transcription factor<\/jats:italic> (<jats:italic>Runx<\/jats:italic>)<jats:italic>2<\/jats:italic>, was induced by Hh\u2010Ag 1.7, which also rescued the osteoblast differentiation defect of RD\u2010127, a mesenchymal cell line from <jats:italic>Runx2<\/jats:italic>\u2010deficient mice. Hh\u2010Ags also activated canonical Wnt signaling and synergized with low doses of BMP\u20102 to enhance osteoblastic potential. Thus, Hh\u2010Ag 1.7 could be useful for bone healing in individuals with abnormalities in osteogenesis, such as osteoporosis patients and the elderly, and can contribute to the development of novel therapeutics for the treatment of bone fractures and defects. J. Cell. 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