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Hedgehog (HH) signaling participates in hepatobiliary repair after injury and is activated in patients with cholangiopathies. Cholangiopathies are associated with bile duct (BD) hyperplasia, including expansion of peribiliary glands, the niche for biliary progenitor cells. The inflammation-associated cytokine interleukin (IL)-33 is also up-regulated in cholangiopathies, including cholangiocarcinoma. We hypothesized that HH signaling synergizes with IL-33 in acute inflammation-induced BD hyperplasia. We measured extrahepatic BD (EHBD) thickness and cell proliferation with and without an IL-33 challenge in wild-type mice, mice overexpressing Sonic HH (pCMV-Shh), and mice with loss of the HH pathway effector glioma-associated oncogene 1 (Gli1lacZ/lacZ ). LacZ reporter mice were used to map the expression of HH effector genes in mouse EHBDs. An EHBD organoid (BDO) system was developed to study biliary progenitor cells in vitro. EHBDs from the HH overexpressing pCMV-Shh mice showed increased epithelial cell proliferation and hyperplasia when challenged with IL-33. In Gli1lacZ/lacZ mice, we observed a decreased proliferative response to IL-33 and decreased expression of Il6. The HH ligands Shh and Indian HH (Ihh) were expressed in epithelial cells, whereas the transcriptional effectors Gli1, Gli2, and Gli3 and the HH receptor Patched1 (Ptch1) were expressed in stromal cells, as assessed by in situ hybridization and lacZ reporter mice. Although BDO cells lacked canonical HH signaling, they expressed the IL-33 receptor suppression of tumorigenicity 2. Accordingly, IL-33 treatment directly induced BDO cell proliferation in a nuclear factor κB-dependent manner. Conclusion: HH ligand overexpression enhances EHBD epithelial cell proliferation induced by IL-33. This proproliferative synergism of HH and IL-33 involves crosstalk between HH ligand-producing epithelial cells and HH-responding stromal cells.