The hedgehog family of proteins have been Implicated as important signaling molecules in establishing cell positional information and tissue patterning. Here we present the cloning and characterization of a hedgehog homologue from Xenopus laevls similar to the sonic class of vertebrate hedgehog genes. We isolated Xenopus hedgehog (Xhh) from a subtractive hybridization screen designed to identify genes Induced by thyroid hormone during metamorphosis of the X.laevls gastrointestinal tract. In the intestine, Xhh mRNA expression was up-regulated at the climax of metamorphosis (stage 62) when intestinal epithelium underwent morphogenesis. Treatment of pre-metamorphic tadpoles with exogenous thyroid hormone (TH) resulted in a similar pattern of Xhh induction. Furthermore, TH induction was resistant to inhibitors of protein synthesis suggesting that Xhh is a direct thyroid hormone response gene. The expression and TH regulation of Xhh was not limited to the intestine, but was also observed In the limb and a mixture of pancreas and stomach. Throughout development, Xhh mRNA was present at varying levels with the earliest expression being detected at neurula stage. The highest levels of Xhh were observed between stages 33 and 40 shortly before tadpole feeding begins. Whole mount In situ hybridization analysis of Xhh expression in pre-hatching, stage 32 tadpoles demonstrated staining In the notochord and floor plate similar to that observed for other vertebrate hedgehog genes. Together, these data suggest a putative role for Xhh in organ development during both amphibian embryogenesis and metamorphosis.