All,
It looks like the MySQL schema generation code generates an index whenever a foreign key is created in order to ensure that queries are reasonably fast. This is not, however, done for Microsoft SQL Server. I wanted to change this behavior.

I've scoured the source code and don't see any easy way to do this (modifying the SQL server dialect won't work because the procedure to override occurs doesn't actually provide the table for which the foreign constraint is being added.

Any suggestions?

Hibernate does not create any index implicitly. It is the underlying database that might create the index for a foreign key. When using PostgreSQL and MySQL (InnoDB), the index is created automatically. Unfortunately, SQL Server does not create indexes automatically for foreign keys, so you have to do that explicitly.

Although JPA offers the @Index annotation, you are better off using a tool like Flyway to generate your schema.