Developmental pathways first elucidated by genetic studies in the fruit fly, Drosophila melanogaster, are conserved in vertebrates, and disruption of these pathways has been associated with various human congenital anomalies. Many developmental genes continue to play an important role in regulation of cell growth and differentiation after embryogenesis, and mutations in some of these genes can result in cancer. Basal cell carcinoma (BCC) of the skin is the most common type of cancer in humans. Although most BCCs are sporadic, in rare cases, individuals have a hereditary disease, Gorlin syndrome, that predisposes to multiple skin tumors as well as a variety of birth defects. Mutations in the human homolog of a Drosophila gene, patched, underlie Gorlin syndrome. Genetic studies in Drosophila show that patched is part of the hedgehog signaling pathway, important in determining embryonic patterning and cell fate in multiple structures of the developing embryo. Human patched is mutated in sporadic as well as hereditary BCCs, and inactivation of this gene is probably a necessary if not sufficient step for tumor formation. Delineation of the biochemical pathway in which patched functions may lead to rational medical therapy for skin cancer and possibly other tumors.