(A) In the absence of Hedgehog ligands such as SHH, PTCH1 localizes to the primary cilium and, through an unknown mechanism, prevents SMO from entering the cilium. GLI proteins bind SUFU, a negative regulator, and are phosphorylated by kinases, such as PKA, to generate transcriptional repressors that enter the nucleus and silence the Hedgehog transcriptional program. (B) In the presence of SHH, PTCH1 leaves the cilium, allowing SMO to accumulate at the primary cilium membrane. At the cilium, SMO inhibits the formation of GLI3 repressor and activates GLI2, which enters the nucleus to promote transcription of Hedgehog target genes. (C) Inactivating mutations in PTCH1, PTCH2, or SUFU; activating mutations in SMO (denoted here as an asterisk); or amplification of GLI2 can activate expression of Hedgehog target genes in an unregulated way, leading to cancer.