Role of GLI proteins in embryonic hair follicle development. A) Hair follicle development is initiated by reciprocal signaling between epidermal and underlying dermal cells leading to the formation of the epidermal placode that expresses Shh. Paracrine as well as autocrine signaling by Shh is thought to be required for the elongation, down-growth and morphogenesis of the hair follicle. In the mature hair follicle SHH expression is found in the matrix region, while GLI1, GLI2 and the GLI target genes PTCH, BCL2 and FOXE1 are restricted to the outer root sheath (ORS), which is contiguous with the basal layer of the epidermis. GLI2 and FOXE1 mRNA is also expressed in the basal layer of interfollicular epidermis.24,53 B) Hair follicle development is disturbed in Shh -/- and Gli2 -/- mice but normal in Gli1 and Gli3 homozygous mutants, suggesting that Gli2 rather than Gli1 or Gli3 acts as mediator of Shh-signaling during embryonic hair development.