Hedgehog (Hh) signaling proteins regulate multiple developmental and adult homeostatic processes. A defining feature of Hh signaling is that relatively small changes in the concentration of Hh ligand elicit dramatically different cellular responses. As a result, the processing, release and trafficking of Hh ligands must be tightly regulated to ensure proper signaling. In addition, sensitive and specific intracellular signaling cascades are needed to interpret subtle differences in the level of Hh signal to execute an appropriate response. A detailed understanding of the mechanisms that regulate these responses is critical to shaping our view of this key regulatory system.