We have characterized two new members of the Hedgehog (Hh) family in zebrafish, ihha and dhh, encoding for orthologues of the tetrapod Indian Hedgehog (Ihh) and Desert Hedgehog (Dhh) genes, respectively. Comparison of ihha and Type X collagen (col10a1) expression during skeletal development show that ihha transcripts are located in hypertrophic chondrocytes of cartilaginous elements of the craniofacial and fin endoskeleton. Surprisingly, col10a1 expression was also detected in cells forming intramembranous bones of the head and in flat cells surrounding cartilaginous structures. The expression of col10a1 in both endochondral and intramembranous bones reflects an atypical composition of the extracellular matrix of the zebrafish craniofacial skeleton. In addition, during fin ray regeneration, both ihha and col10a1 are detected in scleroblasts, osteoblast-like cells secreting the matrix of the dermal bone fin ray. The presence of cartilage markers suggests that the dermal fin ray possesses an intermediate phenotype between cartilage and bone. Developmental Dynamics 235:478–489, 2006. © 2005 Wiley-Liss, Inc.