Emerging laboratory and clinical investigations demonstrate that Hedgehog signaling (Hh) represents a novel therapeutic target in various human cancers. This conserved signaling pathway precisely regulates self-renewal and terminal differentiation in embryonic development, but is typically silenced in adult tissues, with reactivation usually only during tissue repair. Aberrant Hh pathway signaling has been implicated in the pathogenesis, self-renewal, and chemotherapy resistance of a growing number of solid and hematologic malignancies. Major components of the Hh pathway include the Hh ligands (Sonic, Desert, and Indian), the transmembrane receptor Patched, the signal transducer Smoothened (Smo), and transcription factors Gli1–3 which regulate the transcription of Hh target genes. Mutations in Hh pathway genes, increased Hh signaling in tumor stroma, and Hh overexpression in self-renewing cells (cancer stem cells) have been described, and these different modes of Hh signaling have implications for the design of Hh pathway inhibitors and their integration into conventional treatment regimens. Discovery of a naturally-occurring Smo inhibitor, cyclopamine, and the identification of Hh pathway mutations and over expression in cancer cells prompted the development of several cyclopamine derivatives. Encouraging laboratory and in vivo data has resulted in Phase I and II clinical trials of Smo inhibitors. In this review, we will discuss the current understanding of Hh pathway signaling in malignancy and Smo antagonists in development. Recent data with these agents shows that they are well-tolerated and may be effective for subsets of patients. Challenges remain for appropriate patient selection and the optimal combination and sequence of these targeted therapies into current treatment paradigms.