Hh proteins represent a new signaling paradigm in metazoan development. In species ranging from fruit flies to humans, Hh proteins mediate multiple processes vital to appropriate pattern formation in the developing embryo. Hh proteins undergo an autoprocessing event in which the full-length protein is cleaved into N-terminal and C-terminal domains (Hh-N and Hh-C, respectively), and a cholesterol moiety becomes covalently attached to Hh-N. All known signaling activities of Hh proteins are mediated by Hh-N while both the cleavage and cholesterol transfer reactions are mediated by Hh-C. The cholesterol attached to Hh-N is required to retrict the range of Hh signaling and may be involved in ensuring appropriate reception of the Hh signal in target tissues. Disruptions of Hh signaling pathways lead to severe developmental defects in newborns and cancers in adults. While studies of Hh proteins have yielded a wealth of new insight into the molecular mechanisms of metazoan development, many outstanding questions concerning Hh signaling mechanisms ensure that unraveling the secrets of this molecule will keep scientists well entertained for the foreseeable future.