Hedgehog (Hh) signaling modulates tissue remodeling by controlling the fate of Hh-responsive cells. Healthy adult livers exhibit little Hh activity. However, cells involved in adult liver repair, including myofibroblasts and progenitors, are capable of producing and responding to Hh ligands. During adult liver injury, Hh ligand production increases and populations of Hh-responsive cells expand. This process is accompanied by fibrosis. Ligand production and Hh-responsive cells diminish as fibrosis resolves and normal hepatic architecture is restored, but Hh signaling persists in hepatocellular carcinomas. These findings suggest that the Hh pathway mediates remodeling responses that are triggered by adult liver damage.