The Hedgehog (Hh) signaling pathway is intimately linked to cell growth and differentiation, with normal roles in embryonic pattern formation and adult tissue homeostasis and pathological roles in tumor initiation and growth. Recent advances in our understanding of Hh response have resulted from the identification of new pathway components and new mechanisms of action for old pathway components. The most striking new finding is that signal transmission from membrane to cytoplasm proceeds through recruitment, by the seven-transmembrane protein Smoothened, of an atypical kinesin, which routes pathway activation by interaction with other components of a complex that includes the latent zinc finger transcription factor, Ci.