The hedgehog (HH) signaling pathway is critical for ovarian function in Drosophila, but its role in the mammalian ovary has not been defined. Previously, expression of a dominant active allele of the HH signal transducer protein smoothened (SMO) in Amhr2^cre/+SmoM2 mice caused anovulation in association with a lack of smooth muscle in the theca of developing follicles. The current study examined events during the first 2 wk of life in Amhr2^cre/+SmoM2 mice to gain insight into the cause of anovulation. Expression of transcriptional targets of HH signaling, Gli1, Ptch1, and Hhip, which are used as measures of pathway activity, were elevated during the first several days of life in Amhr2^cre/+SmoM2 mice compared to controls but were similar to controls in older mice. Microarray analysis showed that genes with increased expression in 2-day-old mutants compared to controls were enriched for the processes of vascular and tube development and steroidogenesis. The density of platelet endothelial cell adhesion molecule (PECAM)-labeled endothelial tubes was increased in the cortex of newborn ovaries of mutant mice. Costaining of preovulatory follicles for PECAM and smooth muscle actin showed that muscle-type vascular support cells are deficient in theca of mutant mice. Expression of genes for steroidogenic enzymes that are normally expressed in the fetal adrenal gland were elevated in newborn ovaries of mutant mice. In summary, overactivation of HH signaling during early life alters gene expression and vascular development and this is associated with the lifelong development of anovulatory follicles in which the thecal vasculature fails to mature appropriately.