Anorectal malformations are congenital anomalies that form a spectrum of disorders, from the most benign type with excellent functional prognosis, to very complex, such as cloaca malformation in females in which the rectum, vagina and urethra fail to develop separately and instead drain via a single common channel into the perineum. The severity of this phenotype suggests that the defect occurs in the early stages of embryonic development of the organs derived from the cloaca. Owing to the inability to directly investigate human embryonic cloaca development, current research has relied on the use of mouse models of anorectal malformations. However, even studies of mouse embryos lack analysis of the earliest stages of cloaca patterning and morphogenesis. Here we compared human and mouse cloaca development and retrospectively identified that early mis-patterning of the embryonic cloaca might underlie the most severe forms of anorectal malformation in humans. In mouse, we identified that defective sonic hedgehog (Shh) signaling results in early dorsal-ventral epithelial abnormalities prior to the reported defects in septation. This is manifested by the absence of Sox2 and aberrant expression of keratins in the embryonic cloaca of Shh knockout mice. Shh knockout embryos additionally develop a hypervascular stroma, which is defective in BMP signaling. These epithelial and stromal defects persist later, creating an indeterminate epithelium with molecular alterations in the common channel. We then used these animals to perform a broad comparison with patients with mild-to-severe forms of anorectal malformations including cloaca malformation. We found striking parallels with the Shh mouse model, including nearly identical defective molecular identity of the epithelium and surrounding stroma. Our work strongly suggests that early embryonic cloacal epithelial differentiation defects might be the underlying cause of severe forms of anorectal malformations in humans. Moreover, deranged Shh and BMP signaling is correlated with severe anorectal malformations in both mouse and humans.