Sonic hedgehog (Shh) is the most widely characterized of the three vertebrate Hedgehog homologs, and is essential for proper embryonic development. Shh binds to its receptor, Patched (Ptch1), resulting in the de-repression of Smoothened (Smo). This leads to the activation of Gli2, which regulates the transcription of target genes that include Gli1 and Ptch1. Several synthetic and naturally occurring small-molecule modulators of Smo have been discovered. Shh-signaling antagonists that bind to Smo include cyclopamine, SANT1, and Cur-61414. Shh signaling agonists that bind to Smo include the synthetic small molecules purmorphamine and SAG. Small molecules that inhibit Shh signaling downstream of Smo, GANT58 and GANT61 have also been reported. Robotnikinin inhibits the Shh pathway by directly targeting Shh. Although progress has been made in understanding and modulating Shh signaling, fundamental aspects of Shh signal transduction remain obscure, including the mechanism(s) whereby Ptch1 regulates Smo activity. Small-molecule modulators of Shh signaling provide a means to regulate the activity of a pathway implicated in medulloblastoma, basal cell carcinoma (BCC), pancreatic cancer, prostate cancer and developmental disorders. Several Shh inhibitors have not succeeded in the clinic for unknown reasons, but clinical trials in BCC and pancreatic cancer with the promising Smo antagonists GDC-0449 and IPI-926 are currently underway.