The role of Hedgehog signaling in human basal cell hyperplasia formation and its progressing towards tumorigenesis was investigated. Hedgehog signaling members including PTCH1, GLI1, GLI2, and GLI3 were found co-localized with p63 expression in most hyperplastic basal cells, but rarely in normal basal cells, suggesting Hedgehog involvement in basal cell hyperplasia formation. Both CK-14 and CK-8 markers were found co-localized in the majority of hyperplastic basal cells, but relatively few in the normal basal cells, indicating a Hedgehog-promoted transitory differentiation. Furthermore, CK-14 and PTCH1 were found co-localized with CD44 in the hyerplastic basal cells, in a way similar to the CD44 co-localization with PTCH1 and GLI1 in the cancer cells. Together, the present study indicated Hedgehog involvement in forming basal cell hyperplasia and its progressing towards cancer, presumably by transforming the normal basal stem cells into the cancer stem cells where persistent Hedgehog activation might be mandatory for tumorigenesis.