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.We analyzed transcriptomes of mouse and hPSC-derived enteric NCs using single-cell RNA sequencing (scRNA-seq) to identify changes in expression associated with lineage differentiation. Intestine tissues were collected from Tg(GBS-GFP), Sufu, Ptch1 and Gli3 mice and analyzed by flow cytometry and immunofluorescence for levels of mRNAs encoding factors in the hedgehog signaling pathway during differentiation of enteric NCs. Human NC cells (HNK-1 p75) were derived from IMR90 and UE02302 hPSC lines. hPSC were incubated with hedgehog agonists (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 for assessing the functional maturity of the hPSC-derived neurons, respectively.scRNA-seq analysis revealed that neural fate acquisition by human and mouse enteric NCs requires reduced expression of NC- and cell cycle- specific genes and upregulation 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 hPSC 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 upregulating 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.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.