Mouse bladder mesenchyme differentiates into smooth muscle under the influence of urothelium at gestational day 13.5 (E13.5). Sonic hedgehog (Shh) is considered to be the upstream gene arising from the urothelium, which induces smooth muscle in the peripheral bladder mesenchyme. We hypothesize differential gene expression across the full thickness of bladder mesenchyme as a function of proximity to the inducing bladder urothelium and the peripheral location of the smooth muscle. Embryonic bladders from FVB mice were collected at E12.5, 13.5, 15 and 16 and cryosectioned followed by microdissection with a PixCell II laser capture microscope. RNA extraction was performed at the laser captured sites and mRNA expression profiles were measured using SYBR Green quantitative RT-PCR. Smooth muscle a-actin (SMAA) and smooth muscle myosin heavy chain (SM-MHC) were expressed in the E13.5, E15 and E16 bladders in the peripheral layer of mesenchyme, but not in the prospective submucosa. Patched 1 (Ptc1), Gli1 and bone morphogenetic protein (Bmp) 4 expression was consistently elevated in the mesenchymal layer immediately adjacent to the urothelium compared to the peripheral location at E12.5. After E12.5, Ptc1 expression decreased to an undetectable level throughout the bladder mesenchyme. The level of TGF-beta1 was highest in the mesenchymal layer adjacent to the serosa at E13.5. The level of expression of serum response factor (SRF) was also highest at E15 in the peripheral mesenchyme. Genes downstream of Shh are differentially expressed in the prospective submucosa vs. the peripheral bladder mesenchyme as a function gestation age and smooth muscle differentiation.