The hedgehog signalling pathway is responsible for the embryonic patterning of a range of tissues, and it is now known that dysregulation of this pathway can result in the formation of several tumour types. This cascade is regulated at the cell surface by the opposing actions of the patched and smoothened molecules which together form a receptor complex for hedgehog. The discovery that inactivation of the human patched gene is responsible for familial and sporadic forms of basal cell carcinoma firmly established a role for dysregulation of hedgehog signalling in tumorigenesis. Other key members of this pathway have also been shown to be involved in tumour formation, as have more distal downstream targets of hedgehog signalling. Since it appears that tumorigenesis results from constitutive activation of hedgehog responsive genes, the identification of novel downstream targets of hedgehog signalling in given cell types is likely to increase our understanding of the molecular processes underlying tumour formation.