Recent work has established that activation of Hedgehog/patched signalling plays a key role in the development of basal cell carcinomas (BCCs). In Drosophila the effects of hedgehog signalling are mediated by the transcription factor Cubitus interruptus, which is homologous to the mammalian Gli family of transcription factors. In order to investigate the downstream consequences of patched gene inactivation in BCCs, we have investigated the expression of Gli-1 and Gli-3 in normal skin and BCCs by reverse transcription-polymerase chain reaction (RT-PCR) and in situ hybridization. Gli-3 was found to be expressed in both normal skin and BCCs by both RT-PCR and in situ hybridization using a Gli-3-specific probe. Using a sensitive RT-PCR assay we were unable to detect Gli-1 transcripts in normal skin. Gli-1 was expressed in 13 of 14 BCCs examined, and in situ hybridization confirmed that the transcripts were localized to the epithelial component of the tumours. Our results demonstrate that inactivation of the patched gene BCCs is associated with the accumulation of Gli-1 transcripts. These findings suggest that the Gli-1 transcription factor plays a key role in BCC development.