The Hedgehog (Hh) pathway plays central roles in animal development and stem-cell function. Defects in Hh signalling lead to birth defects and cancer in humans. The first and often genetically damaged step in this pathway is the interaction between two membrane proteins - Patched (Ptc), encoded by a tumour suppressor gene, and Smoothened (Smo), encoded by a proto-oncogene. Recent work linking Hh signalling to sterol metabolites and protein-trafficking events at the primary cilium promises to shed light on the biochemical basis of how Patched inhibits Smoothened, and to provide new avenues for cancer treatment.