Epithelial-mesenchymal transitions (EMTs) play an important role in tissue construction during embryogenesis, and evidence suggests that this process may also help to remodel some adult tissues after injury. Activation of the hedgehog (Hh) signaling pathway regulates EMT during development. This pathway is also induced by chronic biliary injury, a condition in which EMT has been suggested to have a role. We evaluated the hypothesis that Hh signaling promotes EMT in adult bile ductular cells (cholangiocytes). In liver sections from patients with chronic biliary injury and in primary cholangiocytes isolated from rats that had undergone bile duct ligation (BDL), an experimental model of biliary fibrosis, EMT was localized to cholangiocytes with Hh pathway activity. Relief of ductal obstruction in BDL rats reduced Hh pathway activity, EMT, and biliary fibrosis. In mouse cholangiocytes, coculture with myofibroblastic hepatic stellate cells, a source of soluble Hh ligands, promoted EMT and cell migration. Addition of Hh-neutralizing antibodies to cocultures blocked these effects. Finally, we found that EMT responses to BDL were enhanced in patched-deficient mice, which display excessive activation of the Hh pathway. Together, these data suggest that activation of Hh signaling promotes EMT and contributes to the evolution of biliary fibrosis during chronic cholestasis.