The Wnt and Hedgehog (Hh) signalling pathways have long been known to direct growth and patterning during embryonic development. Recent evidence also implicates these pathways in the postembryonic regulation of stem-cell number in epithelia such as those of the skin and intestine, which undergo constant renewal. A pathological role for the Wnt and Hh pathways has emerged from studies showing a high frequency of specific human cancers associated with mutations that constitutively activate the transcriptional response of these pathways. This article focuses on Hh and Wnt signal transduction and reviews evidence suggesting that tumorigenesis associated with pathway activation may result from mis-specification of cells towards stem-cell or stem cell-like fates.