Hedgehog (Hh) signaling plays an important role in several malignancies but its clinical significance in breast cancer is unclear. In a cohort of 279 patients with invasive ductal carcinoma of the breast, expression of Hh ligand was significantly associated with increased risk of metastasis, breast cancer-specific death, and a basal-like phenotype. A paracrine signature, encompassing high epithelial Hh ligand and high stromal Gli1, was an independent predictor for overall survival in multivariate analysis. In 2 independent histological progression series (n = 301), Hh expression increased with atypia. Hh ligand overexpression in a mouse model of basal breast cancer increased growth, induced a poorly differentiated phenotype, accelerated metastasis, and reduced survival. A stromal requirement for these effects was supported by the lack of similar Hh-mediated changes in vitro, and by stromal-specific expression of Hh target genes in vivo. Furthermore, inhibition of Hh ligand with a monoclonal antibody (5E1) inhibited tumor growth and metastasis. These data suggest that epithelial–stromal Hh signaling, driven by ligand expression in carcinoma cells, promotes breast cancer growth and metastasis. Blockade of Hh signaling to peritumoral stromal cells may represent a novel therapeutic approach in some basal-like breast cancers. Cancer Res; 71(11); 4002–14. ©2011 AACR.