The Hedgehog (Hh) pathway mediates normal patterning during embryogenesis and contributes to tissue homeostasis after development is complete. Aberrant activation of Hh signaling has been implicated in a wide variety of malignancies and is involved in multiple cellular processes important in carcinogenesis and tumor progression. Strikingly, mutations that constitutively activate the Hh pathway cause the nevoid basal cell carcinoma (BCC) syndrome (NBCCS), which is a heritable cancer predisposition syndrome that greatly increases the risk of developing BCCs and medulloblastomas. Preclinical data have demonstrated that Hh inhibition is an attractive target in cancer, but the translation of this research to the clinic has been a challenge. Despite a number of negative clinical trials, Hh-directed therapies are proven to be effective in cancers reliant on this pathway, and future trials must be designed to properly select for patients with Hh-driven tumors to increase the likelihood of a positive result. Here, we review the mechanisms underlying the pathway and different strategies used to inhibit Hh signaling. We also discuss the role that the Hh pathway plays in carcinogenesis and carefully examine available trial data to understand why clinical applications have lagged behind preclinical successes. Finally, we address the future of Hh-directed therapies and factors that will be critical to effectively expanding their use for the treatment of cancer patients.