Abstract: Hedgehog signaling coordinates a variety of patterning processes during early embryonic development. Drosophila hedgehog and its vertebrate orthologs, Sonic hedgehog, Indian hedgehog, and Desert hedgehog, share a generally conserved signal transduction cascade. However, the particular mechanisms by which the lipid-modified molecules specify embryonic tissues differ substantially. Vertebrate skeletal patterning is one of the most intensively studied biological processes. During skeletogenesis, Sonic and Indian hedgehog provide positional information and initiate or maintain cellular differentiation programs regulating the formation of cartilage and bone. They either signal directly to adjacent cells or form tightly regulated gradients that act over long distances to pattern the axial and appendicular skeleton and regulate crucial steps during endochondral ossification. As a consequence, malfunction of the hedgehog signaling network can cause severe skeletal disorders and tumors.