The Hedgehog pathway is critical for many developmental processes, including the formation of several epidermal appendages. In the mammary gland strict regulation of the Hedgehog pathway is required for normal development. Alterations in Hedgehog signaling result in defects in both the embryonic and postnatal mammary gland. Activation of Hedgehog signaling either by mutation or misexpression of pathway members can lead to the development and/or progression of cancers in multiple organs. This review addresses the current understanding and controversies of Hedgehog signaling in mammary gland development and its potential role in promoting breast carcinogenesis and cancer progression.