Studies of the major signaling pathways have revealed a connection between development, regeneration and cancer, highlighting common signaling networks utilized in these processes. The Hedgehog (Hh) pathway plays a central role in the development of most tissues and organs in mammals. In addition, Hh signaling is required for tissue homeostasis and regeneration in adults, while perturbed Hh signaling is associated with several types of human cancers. A fundamental understanding of Hh signaling will not only enhance our knowledge of how the embryos are patterned but also provide tools to treat diseases related to aberrant Hh signaling. Studies over the past two decades have identified major players in the Hh pathway and yielded a basic framework of Hh signaling. They also establish the foundation for addressing unresolved issues of Hh signaling in basic research and clinical applications. A detailed characterization of the biochemical interactions between Hh components will help explain the production of graded Hh responses required for tissue patterning. Additional cell biological and genetic studies will offer new insight into the role of Hh signaling in homeostasis and regeneration. Finally, drugs that are capable of manipulating the Hh pathway can be used to treat human diseases caused by disrupted Hh signaling. Importantly, these investigations will also serve as a paradigm for studying signal transduction/integration in homeostasis and disease, and for translating discovery from bench to bedside.