The influence of neural activity on astrocytes and their reciprocal interactions with neurons has emerged as an important modulator of synapse function. Astrocytes exhibit activity-dependent changes in gene expression, yet the molecular mechanisms by which neural activity is coupled to gene expression are not well understood. The molecular signaling pathway, Sonic hedgehog (Shh), mediates neuron-astrocyte communication and regulates the organization of cortical synapses. Here, we demonstrate that neural activity stimulates Shh signaling in cortical astrocytes and upregulates expression of Hevin and SPARC, astrocyte-derived molecules that modify synapses. Whisker stimulation in both male and female mice promotes activity-dependent Shh signaling selectively in the somatosensory, but not in the visual cortex, whereas sensory deprivation reduces Shh activity, demonstrating bidirectional regulation of the pathway by sensory experience. Selective loss of Shh signaling in astrocytes reduces expression of Hevin and SPARC and occludes activity-dependent synaptic plasticity. Taken together, these data identify Shh signaling as an activity-dependent, molecular signaling pathway that regulates astrocyte gene expression and promotes astrocyte modulation of synaptic plasticity.