The Hedgehog (Hh) signaling pathway is a key regulator of both embryonic development and homeostasis of adult tissues, including thymus and blood. In the thymus, Hh signals for differentiation, survival and proliferation in the early stages of T cell development, before TCR gene rearrangement. Our recent data has shown that Hh signaling also modulates T cell receptor (TCR) signal strength in more mature T lineage cells. We showed that constitutive activation of the Hh pathway in thymocytes (by transgenic expression of the transcriptional activator form of Gli2) decreased TCR signal strength with profound consequences for the thymus-allowing self-reactive T cells to escape deletion and altering T cell CD4/CD8 lineage decisions. In contrast, in the Sonic Hh deficient thymus, TCR signaling was increased, again influencing both TCR repertoire selection and CD4/8 lineage commitment. In peripheral T cells, the transcriptional changes induced by activation of the Hh signaling pathway lead to reduced T cell activation. Hh signaling also attenuated ERK phosphorylation and proliferation in mature T cells on TCR ligation. Modulation of TCR signal strength by Hh pathway activation has importance for immunity as the presence or absence of Hh in the environment in which a T cell is activated would shape the immune response.