Current studies indicate that Hedgehog (Hh) signaling must be excluded during early stages of pancreas formation. However, conflicting evidence suggests that Hh signaling may be active later during pancreas formation and that it is required for insulin production and secretion in cultured beta-cell lines. The objective of this study was to address these discrepancies by assessing the in vivo role of epithelial Hh signaling in the pancreas.