This article investigates the molecular mechanism of the Hedgehog signaling cascade, one of the most fundamental signaling processes in embryogenesis. The Hedgehog (Hh) signaling response is regulated by the interaction of three key components that include the sonic hedgehog (Shh) ligand, its receptor patched 1 (Ptch1) and the pathway activator smoothened (Smo). Using in vitro and chick embryo models in which key regulatory components of the Hedgehog pathway, the sonic hedgehog Shh ligand and its receptors patched 1 (Ptch1) and patched 2 (Ptch2) were inactivated, we found that Ptch1(-/-) cells remain sensitive to Shh and show a strong Shh ligand dependent upregulation of the Hh signaling response. We show that at early developmental stages, Ptch2 functions to suppress Shh signaling. Cells in which both Ptch1(-/-) and Ptch2(-/-) are inactivated cannot further activate the Shh response, demonstrating that Ptch2 mediates the response to Shh in the absence of Ptch1.