The Hedgehog signaling pathway regulates the development and function of numerous tissues and when mis-regulated causes tumorigenesis. To assess the role of a deregulated Hedgehog signaling pathway in the mammary gland we targeted the expression of the Hedgehog effector protein, GLI1, to mammary epithelial cells using a bigenic inducible system. A constitutively active Hedgehog signaling pathway resulted with 100% penetrance in an undifferentiated mammary lobuloalveolar network during pregnancy. GLI1-expressing transgenic females were unable to lactate and milk protein gene expression was essentially absent. The inability to lactate was permanent and independent of continued GLI1 transgene expression. An increased expression of the GLI1 response gene Snail coupled to reduced expression of E-cadherin and STAT5 in the transgenic mammary gland provides a likely molecular explanation, underlying the observed phenotypic changes. In addition, remodeling of the mammary gland after parturition was impaired and expression of GLI1 was associated with accumulation of cellular debris in the mammary ducts during involution, indicating a defect in the clearance of dead cells. Areas with highly proliferative epithelial cells were observed in mammary glands with induced expression of GLI1. Within such areas an increased frequency of cells expressing nuclear Cyclin D1 was observed. Taken together the data support the notion that correct regulation of Hedgehog signaling within the epithelial cell compartment is critical for pregnancy-induced mammary gland development and remodeling.The Hedgehog (Hh) 2 signal transduction pathway controls a variety of developmental processes such as pattern formation, differentiation, proliferation, and organogenesis and when misregulated causes the formation of developmental defects and tumorigenesis. The molecular details of the Hh signaling pathway have been thoroughly investigated using genetic studies in Drosophila melanogaster (for review see Refs. 1 and 2). The hh signaling cascade starts by binding of hh to the receptor protein ptc, which abrogates its inhibitory effect on smoothened (smo), a 7-span transmembrane co-receptor protein. The active smo protein signals downstream to a microtubule-associated multiprotein complex resulting in a switch from generation of the proteolytically cleaved repressor form of the transcription factor ci to release of a full-length activator form of ci that enters the nucleus and activates target genes.The Hh signaling pathway is well conserved through evolution. However, it is far more complicated in vertebrates with three Hh genes, Sonic, Indian, and Desert (Shh, Ihh, and Dhh); two ptc genes (Ptch1 and Ptch2); and three ci homologues (Gli1, Gli2, and Gli3). In vertebrates, the Hh signal activates Gli2 initiating transcription of Hh target genes, including Ptch1 and Gli1 (3). Gli2 and Gli3 can be expressed in the absence of Hh signaling, whereas Gli1 is strictly dependent on Hh signaling for its expression, which makes Gli1 an excellent reporter of active H...