The production of mature functional T cells in the thymus requires signals from the thymic epithelium. Here, we review recent experiments showing that one way in which the epithelium controls the production of mature T cells is by the secretion of sonic hedgehog (SHH). We consider the increasing evidence that SHH-induced signalling is not only important for the differentiation and proliferation of early thymocyte progenitors, but also for modulating T-cell receptor signalling during repertoire selection, with implications for positive selection, CD4 versus CD8 lineage commitment, and clonal deletion of autoreactive cells. We also review the influence of hedgehog signalling in peripheral T-cell activation.