Hedgehog acyltransferase (Hhat), a member of the membrane-bound O -acyltransferase (MBOAT) family, catalyses the covalent attachment of palmitate to the N-terminus of Hedgehog proteins. Palmitoylation is a post-translational modification essential for Hedgehog signalling. This review explores the mechanisms involved in Hhat acyltransferase enzymatic activity, similarities and differences between Hhat and other MBOAT enzymes, and the role of palmitoylation in Hedgehog signalling. In vitro and cell-based assays for Hhat activity have been developed, and residues within Hhat and Hedgehog essential for palmitoylation have been identified. In cells, Hhat promotes the transfer of palmitoyl-CoA from the cytoplasmic to the luminal side of the endoplasmic reticulum membrane, where Shh palmitoylation occurs. Palmitoylation is required for efficient delivery of secreted Hedgehog to its receptor Patched1, as well as for the deactivation of Patched1, which initiates the downstream Hedgehog signalling pathway. While Hhat loss is lethal during embryogenesis, mutations in Hhat have been linked to disease states or abnormalities in mice and humans. In adults, aberrant re-expression of Hedgehog ligands promotes tumorigenesis in an Hhat-dependent manner in a variety of different cancers, including pancreatic, breast and lung. Targeting hedgehog palmitoylation by inhibition of Hhat is thus a promising, potential intervention in human disease.