Tumorigenesis is often caused by the dysregulation of developmental pathways that are activated during repair, a process that recapitulates development. The Hedgehog (Hh) pathway is a signalling pathway essential for cell patterning and identity during embryogenesis. Activation of Hh signalling has been reported in small cell lung cancer progression, but the role of the Hh receptor, Patched1 (Ptch1), remains poorly understood. Therefore, it is imperative that we understand how Ptch1 is involved in development and tissue repair in order to understand its roles in cancer. This project aimed to study the role of Ptch1 during the branching process of lung development and in the regeneration of airway epithelial cells. A conditional knockout approach was utilised to excise Ptch1 by crossing Ptch1 conditional mice with Dermo1-Cre mice (Dermo1Cre+/-;Ptch1lox/lox), thereby activating the Hh pathway in the mesenchyme, independent of ligand. Dermo1Cre+/-;Ptch1lox/lox embryos died at E12.0 and showed secondary lung branching arrest leading to lobe formation defects. Expression of Ptch1, Gli1 and Foxf1 were shown to be upregulated in both proximal and distal lung mesenchyme, indicating inappropriate pathway activation and disruption of the Hh gradient. Fgf10 expression was spatially reduced in Dermo1Cre+/-;Ptch1lox/lox lungs and the addition of Fgf10 to these lungs in culture showed partial restoration of branching, thus Hh signalling was shown to regulate branching via Fgf10. Due to the patterning defect associated with our in vivo model, we took an in vitro approach to delete Ptch1 in lung explants cultures. This also showed reduced branching and validated that mesenchymal proliferation was enhanced after Ptch1 deletion, consistent with the previously reported role of Hh signalling in mesenchymal cell survival. Small cell lung cancer originates in the proximal lung and has been linked to aberrant repair processes. Therefore, Hh signalling in proximal airway repair was investigated. Ptch1 expressing cells were detected in the bronchial epithelium and stroma during homeostasis. But these cells were not detected following polidocanol-induced injury in the murine nasal septum and lung. However during naphthalene-induced repair, Ptch1 expressing cells were detected in the regenerating bronchial epithelium, suggesting that Hh dependent progenitors respond specifically to naphthalene-induced damage and perhaps are pulmonary neuroendocrine or variant Clara cells. Therefore, this project has provided insight into how Ptch1 patterns lung branching and lobe specification during development and also highlights the importance of Ptch1 in pulmonary epithelial regeneration.