Hand injuries often result in significant functional impairments and are rarely completely restored. The spontaneous regeneration of injured appendages, which occurs in salamanders and newts, for example, has been reported in human fingertips after distal amputation, but this type of regeneration is rare in mammals and is incompletely understood. Here, we study fingertip regeneration by amputating murine digit tips, either distally to initiate regeneration, or proximally, causing fibrosis. Using an unbiased microarray analysis, we found that digit tip regeneration is significantly associated with hair follicle differentiation, Wnt, and sonic hedgehog (SHH) signaling pathways. Viral over-expression and genetic knockouts showed the functional significance of these pathways during regeneration. Using transgenic reporter mice, we demonstrated that, while both canonical Wnt and HH signaling were limited to epidermal tissues, downstream hedgehog signaling (through Gli) occurred in mesenchymal tissues. These findings reveal a mechanism for epidermal/mesenchyme interactions, governed by canonical hedgehog signaling, during digit regeneration. Further research into these pathways could lead to improved therapeutic outcomes after hand injuries in humans.