The hedgehog morphogenic pathway is essential for the development of numerous organs and tissues in both vertebrates and invertebrates, and dysregulation of hedgehog signalling is also associated with a broad range of mammalian cancers. While a great deal of research has been dedicated to understanding the molecular interactions of the hedgehog signalling pathway itself, much work remains in understanding the downstream transcriptional output of the pathway, and how that output modulates cellular behaviour in target tissues to produce developmental outcomes. The hedgehog pathway is activated by hedgehog proteins and repressed by patched. Downstream of these regulators, the hedgehog signalling cascade involves modification and trafficking of a series of key proteins and ultimately leads to regulation of the GLI family of transcription factors, thereby modulating the transcriptional output of the pathway. This thesis builds on previous work investigating downstream targets of one GLI protein – GLI3 – in the mouse limb (McGlinn et al., 2005). This previous study identified genes that were dysregulated in the anterior limb of the Gli3-null, extra-toes strain of mice (Gli3Xt/Xt). Amongst the identified targets of GLI3 were a number of novel genes. However, further detailed analysis of these genes was not conducted, and therefore, this thesis investigates the embryonic expression or function of three of these novel downstream targets of GLI3, to clarify their regulation by the hedgehog pathway and identify their broader role throughout development. One published work and one paper submitted for publication are contained within this thesis, describing detailed expression of two novel SHH targets, Zinc finger protein 503 (Zfp503) and Pitrolysin metallopeptidase 1 (Pitrm1). Zfp503 belongs to a family of transcription factors that regulate aspects of development across a diversity of species. However, their role in mammals and avians has been poorly described. This manuscript presents a detailed description of Zfp503 expression in the mouse and chicken and examines regulation of Zfp503 in the limb by SHH and BMP signalling. My contribution to this paper was the analysis of WT Zfp503 expression in mouse and chick by section in situ hybridisation, and as such, I am listed as a middle author. Pitrm1 is a metallopeptidase with a broad range of predicted target molecules. Comparisons with family members in mammals and plants suggest Pitrm1 has mitochondrial function and is implicated in the pathology of Alzheimers disease. It is upregulated in response to hedgehog pathway activation in the anterior limb of two mouse models of hedgehog signalling– the Gli3Xt/Xt and Ptch1:Prx-Cre mouse line, which deletes patched1 in the developing limb. It is expressed in multiple developing tissues that are patterned by SHH, suggesting that Pitrm1 may be an important regulator of developmental processes downstream of SHH. For the Pitrm1 manuscript, I contributed the majority of the experimental data and prepared the manuscript, and therefore, I am the first listed author. A third downstream hedgehog target gene described in this thesis is Tmem26. Tmem26 is an entirely novel gene with unknown cellular function, although concurrent work in the Wicking laboratory suggests that Tmem26 regulates cell migration and morphology in cell culture. Tmem26 is negatively regulated by SHH in the anterior mouse limb at 11.5dpc, as shown by use of Gli3Xt/Xt and Ptch1:Prx-Cre mice. Tmem26 expression in wild-type mice is spatially restricted and strikingly evident in the facial prominences, particularly near the point of fusion of the developing lip and in the shelves of the secondary palate. This suggests that Tmem26 may be involved in lip and palate formation and possibly play a role in the common human birth disorders of cleft lip and cleft palate. Generation of a Tmem26 conditional knockout mouse line, followed by germline inactivation of Tmem26 using a ubiquitously expressed Cre line, did not reveal a craniofacial phenotype in embryos or adults. Knockout mice appear healthy and fertile with no obvious developmental defects. This does not preclude a role for Tmem26 in facial development however, as molecular redundancy may be able to compensate for Tmem26 loss in mice. Tmem26 is also expressed in cells and organs of the adult immune system and suggests an alternative possible role for Tmem26 in regulating immune function that could be further investigated using the Tmem26 conditional knockout mouse line.