Inflammation disrupts tissue architecture and function, thereby contributing to the pathogenesis of diverse diseases; the signals that promote or restrict tissue inflammation thus represent potential targets for therapeutic intervention. Here, we report that genetic or pharmacologic Hedgehog pathway inhibition intensifies colon inflammation (colitis) in mice. Conversely, genetic augmentation of Hedgehog response and systemic small-molecule Hedgehog pathway activation potently ameliorate colitis and restrain initiation and progression of colitis-induced adenocarcinoma. Within the colon, the Hedgehog protein signal does not act directly on the epithelium itself, but on underlying stromal cells to induce expression of IL-10, an immune-modulatory cytokine long known to suppress inflammatory intestinal damage. IL-10 function is required for the full protective effect of small-molecule Hedgehog pathway activation in colitis; this pharmacologic augmentation of Hedgehog pathway activity and stromal IL-10 expression are associated with increased presence of CD4+Foxp3+ regulatory T cells. We thus identify stromal cells as cellular coordinators of colon inflammation and suggest their pharmacologic manipulation as a potential means to treat colitis.