The hedgehog (Hh) signalling pathway is conserved throughout metazoans and plays an important regulatory role in both embryonic development and adult homeostasis. Many levels of regulation exist that control the release, reception, and interpretation of the hedgehog signal. The fatty nature of the Shh ligand means that it tends to associate tightly with the cell membrane, and yet it is known to act as a morphogen that diffuses to elicit pattern formation. Heparan sulfate proteoglycans (HSPGs) play a major role in the regulation of Hh distribution outside the cell. Inside the cell, the primary cilium provides an important hub for processing the Hh signal in vertebrates. This review will summarise the current understanding of how the Hh pathway is regulated from ligand production, release, and diffusion, through to signal reception and intracellular transduction.