Signaling pathways direct organogenesis, often through concentration-dependent effects on cells. The hedgehog pathway enables cells to sense and respond to hedgehog ligands, of which the best studied is sonic hedgehog. Hedgehog signaling is essential for development, proliferation, and stem cell maintenance, and it is a driver of certain cancers. Lipid metabolism has a profound influence on both hedgehog signal transduction and the properties of the ligands themselves, leading to changes in the strength of hedgehog signaling and cellular functions. Here we review the evolving understanding of the relationship between lipids and hedgehog signaling.