The Hedgehog (Hh) signaling pathway is of central importance during embryo development in metazoans and governs a diverse array of processes including cell proliferation, differentiation, and tissue patterning. In normal adult physiology, the pathway is implicated in stem cell maintenance, tissue repair and regeneration. However, the pathway's darker side is its involvement in several types of human cancer, to which it confers growth promoting and/or survival capabilities to the cancer cell to varying degrees, and by different mechanisms. The Hh pathway is firmly linked to the etiology of basal cell carcinoma and to at least a subset of medulloblastoma. There is increasing evidence that other sporadic cancers, including those in pancreas, prostate, lung, and breast, could also be dependent on Hh pathway activity. In this review, we provide an overview of the pathway's role in various tumor types, where much of the framework for Hh-dependent malignancies has been elucidated in experimental mouse models. We discuss three different signal transduction models for the pathway's involvement in cancer: i) ligand-independent signaling, ii) ligand-dependent autocrine/juxtacrine signaling, and iii) ligand-dependent paracrine signaling. These different modes of signaling may have implications for future therapeutic interventions aimed at inhibiting the pathway during disease. In addition, crosstalk with other pathways, and indications of non-canonical Hh signaling in cancer cells may further cause complications, or perhaps possibilities, in the treatment regimen. Finally, we review the rapid progress and promising results in the development of small-molecule inhibitors of the Hh pathway.