Human umbilical cord blood (UCB)-derived mesenchymal stem cells (MSCs) are essential tools for regenerative medicine due to their capacity for self-renewal and multi-lineage differentiation. As MSCs are found in very small numbers in various tissues, in vitro cell expansion is an essential step that is needed before these cells can be used in clinical applications. Therefore, it is important to identify and characterize factors that are involved in MSC proliferation and apoptosis. In the present study, we focused on Hedgehog (Hh) signaling because several studies have proposed that Hh signaling plays a critical role in controlling the proliferation of stem and progenitor cells. However, the molecular mechanisms underlying the effects on the proliferation and apoptosis of MSCs remain unclear. In this study, we evaluated the direct effects of Hh signaling on the proliferation and apoptosis of hUCB-MSCs as well as investigated potential downstream regulatory mechanisms that may be responsible for Hh signaling. We observed that the Hedgehog agonist purmorphamine enhanced cell proliferation and suppressed apoptosis through the RNA-binding protein Msi1 by regulating the expression of an oncoprotein (i.e., c-Myc), a cell cycle regulatory molecule (i.e., p21(CIP1,WAF1)) and two microRNAs (i.e., miRNA-148a and miRNA-148b). This study provides novel insights into the molecular mechanisms regulating the self-renewal capability of MSCs with relevance to clinical applications.