The hedgehog (Hh) proteins are a family of complex regulators of embryonic patterning and organ development. The mammalian hedgehog proteins sonic (Shh), indian (Ihh), and desert (Dhh) have distinct functions in the regulation of embryonic pancreas development compared with later functions in the maintenance of pancreatic β-cell mass and the regulation of insulin production. In adult pancreatic islets, Ihh and Dhh, but not Shh, are expressed with their receptors patched and smoothened, resulting in active Hh signaling. Hh signals in β-cells activate the transcription of both the homeodomain transcription factor idx-1 and the insulin genes. In contrast with Ihh and Dhh signaling in the adult pancreas, Shh defines the boundaries of the early embryonic pancreas. Later in pancreas development, Hh signals appear to regulate pancreatic morphogenesis. Because of their capacity to activate the expression of the insulin and idx-1 genes, Hh signals are candidate regulators of adult pancreatic β-cell differentiation. Defining mechanisms by which Hh signals regulate the generation and function of pancreatic β-cells may provide novel targets for therapies of diabetes and other pancreatic disorders.