An increasing progress on the role of Hedgehog (Hh) signaling for carcinogenesis has been achieved since the link of Hh pathway to human cancer was firstly established. In particular, the critical role of Hh signaling in the development of Basal cell carcinoma (BCC) has been convincingly demonstrated by genetic mutation analyses, mouse models of BCCs, and successful clinical trials of BCCs using Hh signaling inhibitors. In addition, the Hh pathway activity is also reported to be involved in the pathogenesis of Squamous Cell Carcinoma (SCC), melanoma and Merkel Cell Carcinoma. These findings have significant new paradigm on Hh signaling transduction, its mechanisms in skin cancer and even therapeutic approaches for BCC. In this review, we will summarize the major advances in the understanding of Hh signaling transduction, the roles of Hh signaling in skin cancer development, and the current implications of "mechanism-based" therapeutic strategies.