Stratum intermedium is a transient and subtle epithelial structure closely associated with inner dental epithelium in tooth germs. Little is known about its development and roles. To facilitate analysis, we used bovine tooth germs, predicting that they may contain a more conspicuous stratum intermedium. Indeed, early bell stage bovine tooth germs already displayed an obvious stratum intermedium with a typical multilayered organization and flanking the enamel knot. Strikingly, with further development, the cuspally located stratum intermedium underwent thinning and involution, whereas a multilayered stratum intermedium formed at successive sites along the cusp-to-cervix axis of odontogenesis. In situ hybridization and immunohistochemistry showed that stratum intermedium produces the signaling molecule Sonic hedgehog (Shh). Maximal Shh expression was invariably seen in its thickest multilayered portions. Shh was also produced by inner dental epithelium; expression was not constant but varied with development and cytodifferentiation of ameloblasts along the cusp-to-cervix axis. Interestingly, maximal Shh expression in inner dental epithelium did not coincide with that in stratum intermedium. Both stratum intermedium and inner dental epithelium expressed the Shh receptor Patched2 (Ptch2), an indication of autocrine signaling loops. Shh protein, but not RNA, was present in underlying dental mesenchyme, probably resulting from gradual diffusion from epithelial layers and reflecting paracrine loops of action. To analyze the regulation of Shh expression, epithelial and mesenchymal layers were separated and maintained in organ culture. Shh expression decreased over time, but was maintained in unoperated specimens. Our data show for the first time that stratum intermedium is a highly regulated and Shh-expressing structure. Given its dynamic and apparently interactive properties, stratum intermedium may help orchestrate progression of odontogenesis from cusp to cervix. © 2001 Wiley-Liss, Inc.