Altered sonic hedgehog (SHH) signaling is crucial in the development of basal cell carcinomas (BCC), the most common human cancer. Mutations in SHH signal transducers, PATCHED and SMOOTHENED, have already been identified, but SHH mutations are extremely rare; only 1 was detected in 74 sporadic BCCs. We present data showing unique SHH mutations in BCCs from repair-deficient, skin cancer-prone xeroderma pigmentosum (XP) patients, which are characterized by high levels of UV-specific mutations in key genes involved in skin carcinogenesis, including PATCHED and SMOOTHENED. Thus, 6 UV-specific SHH mutations were detected in 5 of 33 XP BCCs. These missense SHH alterations are not activating mutations for its postulated proto-oncogene function, as the mutant SHH proteins do not show transforming activity and induce differentiation or stimulate proliferation to the same level as the wild-type protein. Structural modeling studies of the 4 proteins altered at the surface residues, G57S, G64K, D147N, and R155C, show that they do not effect the protein conformation. Interestingly, they are all located on one face of the compact SHH protein suggesting that they may have altered affinity for different partners, which may be important in altering other functions. Additional functional analysis of the SHH mutations found in vivo in XP BCCs will help shed light on the role of SHH in skin carcinogenesis. In conclusion, we report for the first time, significant levels of SHH mutations found only in XP BCCs and none in squamous cell carcinomas, indicating their importance in the specific development of BCCs.