Mental retardation in Down syndrome (DS) appears to be related to severe neurogenesis impairment during critical phases of brain development. Recent lines of evidence in the cerebellum of a mouse model for DS (the Ts65Dn mouse) have shown a defective responsiveness to Sonic Hedgehog (Shh), a potent mitogen that controls cell division during brain development, suggesting involvement of the Shh pathway in the neurogenesis defects of DS. Based on these premises, we sought to identify the molecular mechanisms underlying derangement of the Shh pathway in neural precursor cells (NPCs) from Ts65Dn mice. By using an in vitro model of NPCs obtained from the subventricular zone and hippocampus, we found that trisomic NPCs had an increased expression of the Shh receptor Patched1 (Ptch1), a membrane protein that suppresses the action of a second receptor, Smoothened (Smo), thereby maintaining the pathway in a repressed state. Partial silencing of Ptch1 expression in trisomic NPCs restored cell proliferation, indicating that proliferation impairment was due to Ptch1 overexpression. The overexpression of Ptch1 in trisomic NPCs resulted from increased levels of AICD [a transcription-promoting fragment of amyloid precursor protein (APP)] and increased AICD binding to the Ptch1 promoter. Our data provide novel evidence that Ptch1 overexpression underlies derangement of the Shh pathway in trisomic NPCs with consequent proliferation impairment. The demonstration that Ptch1 overexpression in trisomic NPCs is due to an APP fragment provides a link between this trisomic gene and the defective neuronal production that characterizes the DS brain.