Tube formation of the developing mouse submandibular salivary gland (SMG) begins at embryonic day (E) 14. The SMG of Sonic hedgehog (Shh) null mice was recently shown to fail to progress to stages beyond around E14. Here, we examined the effects of Shh peptide on tube formation of SMG explants. When the SMG rudiments from E14 mice were cultured, terminal buds of glands treated with Shh peptide formed the acini-like structure with a lumen whereas those of control glands remained as cell masses. In the acini-like terminal buds of the treated glands, tight junction proteins of ZO-1 and claudin-3 delineated the lumen and the apical membrane protein aquaporin-5 accumulated at the luminal cell surfaces. Moreover, laminin-5 deposition at the basal lamina region of terminal buds was accelerated in treated glands. It is suggested that hedgehog signaling promotes lumen formation and cell polarization of developing SMG epithelium.