The precise connectivity of inputs and outputs is critical for cerebral cortex function; however, the cellular mechanisms that establish these connections are poorly understood. Here, we show that the secreted molecule Sonic Hedgehog (Shh) is involved in synapse formation of a specific cortical circuit. Shh is expressed in layer V corticofugal projection neurons and the Shh receptor, Brother of CDO (Boc), is expressed in local and callosal projection neurons of layer II/III that synapse onto the subcortical projection neurons. Layer V neurons of mice lacking functional Shh exhibit decreased synapses. Conversely, the loss of functional Boc leads to a reduction in the strength of synaptic connections onto layer Vb, but not layer II/III, pyramidal neurons. These results demonstrate that Shh is expressed in postsynaptic target cells while Boc is expressed in a complementary population of presynaptic input neurons, and they function to guide the formation of cortical microcircuitry.