BACKGROUND & AIMS: It has been a challenge to develop fully functioning cells from human pluripotent stem cells (hPSCs). We investigated how activation of hedgehog signaling regulates derivation of enteric neural crest (NC) cells from hPSCs. METHODS: We analyzed transcriptomes of mouse and hPSC-derived enteric NCs using single-cell RNA sequencing (scRNA-seq) to identify the changes in expression associated with lineage differentiation. Intestine tissues were collected from Tg(GBS-GFP), Sufuf/f; Wnt1-cre, Ptch1+/-, and Gli3Δ699/Δ699 mice and analyzed by flow cytometry and immunofluorescence for levels of messenger RNAs encoding factors in the hedgehog signaling pathway during differentiation of enteric NCs. Human NC cells (HNK-1+p75NTR+) were derived from IMR90 and UE02302 hPSC lines. hPSCs were incubated with a hedgehog agonist (smoothened agonist [SAG]) and antagonists (cyclopamine) and analyzed for differentiation. hPSC-based innervated colonic organoids were derived from these hPSC lines and analyzed by immunofluorescence and neuromuscular coupling assay for expression of neuronal subtype markers and assessment of the functional maturity of the hPSC-derived neurons, respectively. RESULTS: Single-cell RNA sequencing analysis showed that neural fate acquisition by human and mouse enteric NC cells requires reduced expression of NC- and cell cycle-specific genes and up-regulation of neuronal or glial lineage-specific genes. Activation of the hedgehog pathway was associated with progression of mouse enteric NCs to the more mature state along the neuronal and glial lineage differentiation trajectories. Activation of the hedgehog pathway promoted development of cultured hPSCs into NCs of greater neurogenic potential by activating expression of genes in the neurogenic lineage. The hedgehog agonist increased differentiation of hPSCs into cells of the neuronal lineage by up-regulating expression of GLI2 target genes, including INSM1, NHLH1, and various bHLH family members. The hedgehog agonist increased expression of late neuronal markers and neuronal activities in hPSC-derived neurons. CONCLUSIONS: In enteric NCs from humans and mice, activation of hedgehog signaling promotes differentiation into neurons by promoting cell-state transition, expression of genes in the neurogenic lineage, and functional maturity of enteric neurons.