The Hedgehog (Hh) signaling pathway regulates body patterning and organ development during embryogenesis. In adults the Hh pathway is mainly quiescent, with the exception of roles in tissue maintenance and repair, and its inappropriate reactivation has been linked to several disparate human cancers. In addition to cancers with mutations in components of the Hh pathway, Hh ligand-dependent cancers have been proposed to respond to Hh in an autocrine manner. More recent findings that Hh might instead signal in a paracrine manner from the tumor to the surrounding stroma or in cancer stem cells alter our understanding of Hh mechanisms in cancer, with important implications for choice of preclinical tumor models, drug screening, patient selection and therapeutic intervention. We review here the roles of the Hh pathway in cancer, Hh pathway inhibitors (HPIs) and early clinical trial results using a novel small molecule HPI, GDC-0449.