Heterotopic ossification (HO), acquired or hereditary, endochondral or intramembranous, is the formation of true bone outside the normal skeleton. Since perivascular Gli1+ progenitors contribute to injury induced organ fibrosis, and CD133 is expressed by a variety of populations of adult stem cells, this study utilized Cre-lox based genetic lineage tracing to test the contribution to endochondral HO of adult stem/progenitor cells that expressed either Gli1 or CD133. We found that both lineages contributed broadly to different normal tissues with distinct patterns, but that only Gli1-creERT labeled stem/progenitor cells contributed to all stages of endochondral HO in a BMP dependent, injury induced, transgenic mouse model. Hedgehog (Hh) signaling was abnormal at endochondral HO lesion sites with increased signaling surrounding the lesion but diminished signaling within it. Thus, local dysregulation of Hh signaling participates in the pathophysiology of endochondral HO. However, unlike a previous report of intramembranous HO, systemic inhibition of Hh signaling was insufficient to prevent the initiation of the endochondral HO process or to treat the existing endochondral HO, suggesting that Hh participates in, but is not essential for endochondral HO in this model. This could potentially reflect the underlying difference between intramembranous and endochondral HO. Nevertheless, identification of this novel stem/precursor cell population as a HO-contributing cell population provides a potential drugable target.