Hedgehog signaling has been implicated in the development of several human cancers, including small cell lung carcinomas, medulloblastomas, basal cell carcinomas, and digestive tract tumors. Elevated levels of pathway components are observed in pancreatic ductal adenocarcinoma (PDAC) precursor lesions, and these levels increase further as lesions progress to more advanced stages. Yet the mechanisms by which hedgehog signaling contributes to pancreatic tumorigenesis were poorly understood. We recently published results showing that activated hedgehog signaling enhances the proliferation and survival of pancreatic duct epithelial cells, the presumptive target cells for PDAC development. We also demonstrated that sonic hedgehog (Shh) expression, in cooperation with loss of the Trp53 and Ink4a/Arf tumor suppressor loci, was sufficient to initiate the formation of early pancreatic lesions. Furthermore, Shh signaling enhanced K-Ras-mediated pancreatic tumorigenesis and reduced the dependence of tumor cells on the sustained activation of Ras-stimulated signaling pathways. Here we discuss the significance of these findings and the implications for therapy.