Sonic hedgehog (Shh) is a developmental signaling molecule that regulates the specification, proliferation and survival of specific stem cell lineages in vertebrate embryos. Mutations that disrupt Shh signaling cause human birth defects and increased susceptibility to specific cancers. In order to understand the functions of Shh in development and cancer, this project undertakes to identify and characterize target genes regulated by Shh signaling and by its receptor, Patched1 (Ptc1), which is a negative regulator of Hedgehog signal transduction. Subtractive cDNA cloning and DNA array studies of Ptc1 mutant embryos have identified candidate Hedgehog target genes expressed in neural and muscle stem cells. These target genes encode proteins whose putative functions are to regulate cellular processes controlled by Shh signaling, including cell proliferation and apoptosis, as well as proteins that regulate HH transduction itself. The specific functions of HH target genes in Hedgehog signal transduction and cell proliferation will be investigated using tissue culture transfection and chick neural tube electroporation assays. These studies will focus on genes hypothesized to regulate known regulators of Hedgehog signal transduction. These include inhibitors of PKA and PP2A phosphatase, vesicle trafficking proteins, and proteosome/ubiquitination proteins. The role of Shh signaling in myoblasts, muscle satellite cells and muscle stem cells will be investigated using DNA transfection and transgenic approaches to disrupt Hedgehog signaling through misexpression of Hedgehog regulatory proteins, including Ptc1 and a mutant Smoothened (SmoM2) protein that constitutively activates Hedgehog signal transduction. These studies undertake to identify Hedgehog target genes that collaborate to disrupt Hedgehog signaling in muscle stem cells, leading to the formation of rhadomyosarcomas. Hedgehog target genes discovered in this study will provide new insights into fundamental mechanisms of stem cell specification and tumorigenesis that likely will lead to the development of novel stem cell and molecular therapies to prevent human birth defects and to treat human cancers.